A report released by the CFPB on Monday found that for every dollar spent towards financial education programs, $25 is spent on financial marketing, making it difficult for consumers to find objective resources.
The report found that the financial services industry spends approximately $17 billion every year in marketing financial products and services, while only $670 million is spent annually to provide financial education programs to consumers—meaning financial institutions spend approximately $54 per person on marketing and only $2 per consumer to educate them.
The study looked at six sectors, including nonprofit organizations, the federal government, financial institutions, state governments, municipal governments and school districts.
Nonprofits were found to spend the most on financial education programs—approximately $472 million every year, followed by $130 million from the federal government. Approximately 75 percent of education spending comes from private sources, and 25 percent comes from public sources.
In terms of spending, more than half of all awareness advertising, which includes general promotional messages, was spent on credit and loan-related products. Nearly one-fourth of awareness advertising was spent on advertising banking services, and another 19 percent was spent on advertising related to ATM networks and credit counseling services.
Nearly half of all direct marketing is internet marketing, with approximately $6 billion spent towards online displays and ads. Twenty-two percent of direct marketing costs were related to mailed advertisements, 16 percent were television ads and 18 percent was spent on other marketing methods.
“When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information,” CFPB Director Richard Cordray said. “Today’s study further reinforces the dire need for more and better financial education in this country.”