Asset Building Conference Belle Auld and Rebecca Featherstone

Recently I attended the Asset Building Learning Exchange (ABLE) conference in Calgary. The student that I tutor (Rebecca) and I (Belle) decided to write up some of the most interesting things I heard at the conference, for On the Same Page.

Evelyn Tait (with the Alberta government) described the ABLE conference very well:

“A national conference on financial empowerment entitled Asset Building Learning Exchange (ABLE) was held Nov. 5 - 6, 2013 in Calgary with many speakers addressing such issues as municipal financial empowerment, predatory lending and unique ways that other jurisdictions have put practices into place which have led to poverty reduction. Minister Hancock and Mayor Nenshi were guest speakers along with specialists in the field of financial literacy and asset building.
In Calgary and in Edmonton there are financial literacy collaboratives - partnerships of non-profit, government and the financial industry working together to increase financial literacy and more recently also involved in poverty reduction initiatives. See www.financialfuturescalgary.ca to learn about Calgary’s collaborative network.”

First of all, here’s an activity for you.

Match the quote to who said it. Some of them are obvious; some of them may surprise you.

“Appreciative enquiry – I hate that term. It keeps us from doing the real work.”
“I think I paid for my son’s Nintendo ten times over”
“...a progressive Republican – we don’t have those in the US anymore.”

Choices:

• Keynote speaker Michael Sherraden
• Panelist from the Financial Inclusion/Financial Exclusion presentation
• Mayor Naheed Nenshi

At the conference I learned from Jennifer Robson (Asset Poverty and Financial Capability:  Canadian and Global Perspective workshop) that people in the highest income bracket get 50% of their assets from tax subsidies. According to keynote Michael Sherraden, in the US most asset building is in the form of tax benefits (especially retirement and home ownership benefits) that go to the top 10% wage earners. Those tax benefits add up to ½ trillion dollars. In Canada, Robson said, $50 billion in tax subsidies (such as RESPs, RRSPs and TFSAs) go to rich people. The richest 10% of Canadians own 60% of the wealth.

The aim of asset building policies, according to Sherraden, should be to benefit everyone, not just the wealthy, and that policies should aim at fairness. Sherraden also said “income support equals getting by; asset building equals doing better.

Sherraden talked about the global phenomenon of rising inequality in nations’ incomes.

1. More money is going to capital now and less to labour
2. Of the money going to labour, more money is going to the top income earners and less to low income earners.

An example of this is that in 1976, a person working at minimum wage had to work 42 hours/week to reach the Low Income Cut Off (LICO). The latest data is that a person working at minimum wage now has to work 95 hours/week to reach the LICO.

In New York City, where Jonathan Mintz launched the first Office of Financial Empowerment, the Financial Empowerment Centres have helped people reduce $14 million in debt in four years. They have served 30,000 people in that time. One of the most unusual places that New York offers financial counselling is in coffee shops for people just out of jail.

One powerful presentation at the conference was about fringe banking services such as payday loan companies and pawnshops. Payday loan companies are now moving into offering products like lines of credit where there are no regulations. Part of this session involved a panel of three former consumers of fringe banking services. All three panelists had attended financial literacy programs that changed their lives. [We now have the Adult Basic Literacy Education Financial Literacy class at Bow Valley College.] The financial literacy program was the one thing that got them out of the cycle of payday loans, pawnshops and debt. One panelist said “I think I would have turned to crime” in order to put food on the table for her family if there had been no payday loans. 250 people in the audience gasped. A payday loan can cost 780%/year.

So why would a person be willing to pay those fees?  According to Janet Murray and Dr Robert Oxoby (Behavioural Approaches that can Influence Change workshop) people display less loss aversion when they engage with an organization that they identify with. In other words, people prefer to go somewhere that they feel welcome and comfortable, even if it will cost them more. According to the field of Behavioural Economics, people living in poverty identify themselves as a part of that group. Not all banks feel welcoming to people living in poverty.

The opposite of these fringe banking service was explored in Beyond Sponsorship: the Credit Union banking system. A local example of credit unions working with a non-profit is First Calgary. First Calgary works with Momentum on financial literacy programming. Another example is Van City and the Portland Hotel Society (a housing project) who together run the Pigeon Park Savings bank in Vancouver. Tellers at the bank are clients from the housing project. Customers are made to feel comfortable. As one of the Beyond Sponsorship participants said “I quit my membership in the Fraser Institute and took out a membership in the credit union”.

 

In case you still need to know who said what

“Appreciative enquiry – I hate that term. It keeps us from doing the real work.”	Mayor Naheed Nenshi
“I think I paid for my son’s Nintendo ten times over”	Panelist from the Financial Inclusion/Financial Exclusion presentation
“...a progressive Republican – we don’t have those in the US anymore.”	Keynote speaker Michael Sherraden