Description of the programme

• US credit unions have been “promoting thrift” as a core value and thus they are interested in ways to help members manage their money well. In the spring of 2009, the Wisconsin Credit Union League coordinated the ’Real Progress and Pathways to Prosperity’ (RP3) programme. The goal of RP3 was to recruit credit unions in Wisconsin to enrol their employees in an online investor education programme to see whether the education led to knowledge gains and behaviour changes.
• The nine-module programme took an average of 10 hours to complete and covered the following topics: (1) getting started on investing, (2) basics of personal finance, (3) basics of investing, (4) basics of investment strategies, (5) investment risks, (6) basics of retirement planning, (7) investing in mutual funds, (8) working with financial advisors, and (9) saving for college.

The study

• The research uses longitudinal data, and compares the treatment group with a randomised control group.
• Employees from the 45 credit unions that offered the online programme completed a 48-question survey concerning their self-assessed investor knowledge and self-reported investor behaviour in October 2009, January 2010, and April 2010. The total number of observations was 1,052.
• Knowledge measures used were: interest and loans, credit score, stocks and bonds and investing for retirement. A measure that asked employees to recall where they learned about investor issues is included as a gauge of their exposure to the online education programme. Knowledge was self-assessed on a five point scale (1=low, 5=high).
• Behaviour measures used were: individual retirement accounts, written budgets, written financial plan, saving for long-term goals and having three months savings set aside. Self-reported behaviour measures were coded as 1 or 0, where 1 indicates the respondent engaged in the behaviour at the time of the survey and 0 indicates they did not engage, or were not sure.

Key findings

• 54 per cent of respondents reported some college education, and the typical employee had between five and 10 years of employment experience. Most were married and 17 per cent were male, which reflects the high proportion of women employed by credit unions.
• The report indicates that the RP3 online investor education programme improves credit union employees’ self-assessed investor knowledge and self-reported behaviour. Key finding are:
• knowledge of interests and loans increased by 4 per cent;
  • knowledge of credit scores increased by 3 per cent;
  • knowledge of investing for retirement increased by 11 per cent;
  • use of individual retirement accounts increased by 8 per cent;
  • use of written budgets increased by 6 per cent, and
  • use of written financial plans increased by 5 per cent.

Points to consider

• The report has a reasonable sample size, uses longitudinal data, and compares the treatment group with a randomised control group, all of which are methodological strengths. However, the report acknowledges the limitations posed by the self-reported measures of investor knowledge and behaviour. Furthermore, the sample is somewhat unusual in that it consists of a high proportion of married women, reflecting the predominantly female population of credit union employees.

Full report

Investor education for credit union employees - full report