An irreverent Wall Street Blog
FINRA Fear and Wall Street Trembling and The Financial Sickness Unto Death
April 29, 2021
As readers of the "Securities Industry Commentator" and the "BrokeAndBroker.com Blog" know, I am no fan of many of FINRA's press releases and have reserved a special place in hell for those emanating from the FINRA Investor Education Foundation; see, for example:
- "The FINRA Investor Education Foundation Is A Lonely Hunter" (BrokeAndBroker.com Blog / March 24, 2021) at http://www.brokeandbroker.com/5763/finra-loneliness/
- "Dubious FINRA Study Finds Female Arkansas Prison Inmates Are Usually Poor And Financially Illiterate" (BrokeAndBroker.com Blog / July 24, 2020) at http://www.brokeandbroker.com/5343/finra-arkansas-inmates/
- "FINRA Foundation To Empower The Underserved But Batteries Not Included" (BrokeAndBroker.com Blog / June 28, 2019) at http://www.brokeandbroker.com/4665/finra-foundation-underserved/
As Michael Corleone so aptly lamented: "just when I thought I was out, they pull me back in."
Trust me, godfather, I know what you mean!
The other day, FINRA posted this bit of pseudo-academic nonsense: Large Number of Americans Reported Financial Anxiety and Stress Even Before the Pandemic / New study finds lack of financial literacy linked to high levels of stress and anxiety (FINRA Release / April 28, 2021)
https://www.finra.org/media-center/newsreleases/2021/large-number-americans-reported-financial-anxiety-and-stress-even The so-called "new study" regales us, in part, with these idiotic bullet-points in the guise of purportedly helpful recommendations:
Given the connection between low financial literacy and anxiety and stress, the researchers recommend increasing efforts aimed at improving financial knowledge levels especially among high-risk groups. Other recommendations provided by the researchers to help ease financial anxiety and stress include:
- Adults, particularly those at risk of experiencing financial anxiety or stress, should be encouraged to set aside emergency savings. Even small savings can help buffer against future financial shocks, potentially providing relief to stressed and anxiety-ridden households.
- Employers can offer workplace financial wellness programs that address money management topics and options to automatically save for the future.
- Employers can also offer resources to help individuals cope with the anxiety and stress stemming from their financial situation.
- Personal finance experts-such as advisors, counselors and planners-should take heed of the harmful effects of financial anxiety and stress on their clients.
Perhaps one of the most laughable and absurd bits of advice that I have ever read is set out in all its inglorious prose in the first bullet-point above. If you are at risk of financial anxiety or stress, you should "set aside emergency savings." Wow . . . you really need a PhD to come up with such profound findings (he says with drippin' sarcasm). As a somewhat relatively uneducated shlub, I would have figured that if adults are experiencing financial stress, they likely burned through their savings, emergency and otherwise; and those stressed-out folks are probably unable to find the means to set aside further savings, but, like I said, what the hell do I know, right? Perhaps Michael Corleone could introduce these unfortunate adults bereft of savings to a loan-shark? Perhaps the FINRA Investor Education Foundation could produce a podcast or publish an FAQ about "vigorish"?
Then there's that other tidbit of super-duper advice in the FINRA Report: Employers can offer financial wellness programs. Lemme ask ya sumthin', is it just me or don't you usually find that any wellness program that your employer offers is a colossal waste of time and is usually taught by some nephew or family friend of the company's President, and you find yourself sitting in a conference room, not wanting to be there, trying to catch up on your email on your iPhone but trying to do so in a way that's not too obvious because you don't want to be rude, and, crap, we got another 30 minutes of this bull-shit to listen to?
Of course, y'all gotta luv that third bullet-point about how your employer is going to "offer resources to help individuals cope with the anxiety and stress stemming from their financial situation"? The way you see it and mumble to yourself, if you jackasses would just pay me what I'm worth, I wouldn't have so much stress about making ends meet. The way your employer sees it, here's a stress ball with our company's logo on it -- if you're feeling stressed out, squeeze away. Of course, if your employer offers a live, in-person wellness program, this is how you would likely be taught to use a stress ball (as if anyone needs such a lesson):
Finally, just for the hell of it, I actually read through the 36-page Report. Lemme share with you the "Abstract":
The economic impact of the COVID-19 crisis has brought to light the deeply rooted financial struggles that many Americans face. This paper shows that even before the pandemic, a substantial share of households was already anxious and stressed about their personal finances. The greatest levels of anxiety and stress were expressed by women, young adults, those with lower income, those with more financially dependent children, those who are not married, and those who are unemployed. In this paper, we analyze factors likely contributing to high levels of financial anxiety and stress. The empirical analysis is based on the FINRA Foundation's 2018 National Financial Capability Study (NFCS) and complemented by findings from focus groups that were conducted in 2020. We find that lack of assets, high debt, and money management challenges are major contributing factors to high levels of financial anxiety and stress. We also find that financial anxiety and stress can have long-term consequences: those who are financially anxious and stressed are less likely to plan for retirement. Financial literacy seems to matter. Those who could correctly answer three questions designed to measure basic financial literacy are significantly less likely to feel financially anxious or stressed. Finally, focus group findings reveal that individuals who experience financial anxiety and stress engage in daily monitoring of their finances and make decisions that are informed by their financial worries.
Hard not to laugh at the hyperbole, no?
How nice it is to know that FINRA funds studies that delve into the obvious. But for FINRA's spending spree on academic inquiry and analysis, the world would never, ever learn such obtuse and truly complex facts as this:
We find that lack of assets, high debt, and money management challenges are major contributing factors to high levels of financial anxiety and stress.
Like who knew, right? Money well spent FINRA!
Of course, I was in hysterics when in one sentence, the Report referenced "empirical analysis," and a few sentences afterwards, we are informed of this profound metric:
Those who could correctly answer three questions designed to measure basic financial literacy are significantly less likely to feel financially anxious or stressed.
Geez, there are three -- count 'em: 3 -- magical questions that if you can answer, you are on the road to financial literacy! Omigod, it's like the riddle of the Sphinx!
On the first page of the April 28th Report is this disclosure:
This work was conducted with financial support from the FINRA Investor Education Foundation (FINRA Foundation) and is based on data from the National Financial Capability Study (NFCS). The NFCS is a project of the FINRA Foundation.
I would love to know how much money was paid by FINRA for the work involved in the Report.
For over two decades, I have urged FINRA and the financial services industry to establish an anti-fraud fund whereby victims of Wall Street fraud would be compensated for their losses in the event they could not obtain satisfaction from insolvent firms or individuals. Instead of funding my anti-fraud initiative, FINRA provides financial support towards the idiocy exemplified by the April 28th Report.
As I have asked before and do so again, is there any Governor on FINRA's Board of Governors who monitors any of the garbage that is regularly published by the organization? Why not require full disclosure of the funding provided by the FINRA Foundation in each report for which financial support was made?