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Michael Herndon - 2014 Symposium on Financial Education in Korea
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Michael Herndon - 2014 Symposium on Financial Education in Korea


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This presentation by Michael Herndon was made at the High-level Global Symposium on Financial Education: Promoting Long-term Savings and Investments in Korea which explored policies and good practices …

This presentation by Michael Herndon was made at the High-level Global Symposium on Financial Education: Promoting Long-term Savings and Investments in Korea which explored policies and good practices for supporting long-term savings and investments through financial education and financial consumer protection. Find out more at

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  • The first step in our social marketing effort is to determine what behaviors we wantWe ask ourselves, “What actions will most likely help people avoid fraud?”Then, we asked ourselves, “Who needs to take these actions? Who seems to be the most likely victim of fraud?”What we found internally was extremely limited; men make up 75% of our complaintsUsing outside research from US and international sources (at least in English), we settled on the following initial target audience
  • Now, we need to know exactly what to say to our target audience to get them to take the actions we want.We conducted message testing research, beginning with nine focus groups in August 2013In January 2014, we began a quantitative surveyOne thing we immediately discovered is “How do you talk to someone about fraud, when they are not concerned about it?”
  • One thing that appears clear, very few, whether concerned or not about fraud, believes they will get their money back. So, for those not concerned it doesn’t appear to be for believing they can easily get it back. It appears they believe they will not fall victim.
  • We do see that those who report having fallen victim are more concerned.However, notice that among those NOT concerned about fraud, 6% have fallen victim, and of those some have fallen victim more than once.
  • When it comes to messages to gain the attention of our unconcerned investors, we know a variety of appeals can work. Through focus groups, we know that these investors self-identify as independent, very responsible and diligent investors. The messages that most strongly resonate are those that reinforce this identify, while pointing out considerations:Defining responsible research to include not just financial analysis, but also fraud potentialRelying on themselves always – And continually staying on top of trends (again, not just investment but when it comes to fraud as well). Reinforcing that the risk of fraud can also be importantThese independent investors do not, however, identify themselves as potential victims – as they believe they are both smart enough and responsible enough to avoid fraud scams. In total, our target investor needs to be approached in a manner that reinforces their pride as independent, smart and responsible investors first and foremost.
  • We asked about some of the barriers to reporting fraudOne somewhat surprising finding has been a that among those concerned or not, they equally feel government authorities would not follow through on a complaintOur research helps us to address directly that barrier in our messages
  • Concerning the desired behaviors, we found there is a very low incidence of something we want, checking the background of a financial advisor with a government (or quasi-government) authorityIt’s the lowest reported screening action by both groups, and only 17% among those not concerned.This likely will help us to refine our desired behavior changes as the others will far less likely help them avoid fraud especially since the higher ranked actions play into fraud tactics
  • The fourth step is to come up with an outreach plan.We know who we want to “speak” to, and we will soon know what to say and how.Next, we will need to learn WHERE to do this.
  • A message style guide is a printed toolkit to guide our office for years to come in terms of;tones to use and avoid, such as humorous versus frighteningexact words and phrasing to use and avoidtypes of visual images to use and avoid, such as pictures, graphs, symbols, and charts
  • Transcript

    • 1. U.S. Commodity Futures Trading Commission Consumer Outreach Social Marketing and Research Overview High-level Global Symposium on Financial Education 26-27 February 2014, Seoul, Korea 1
    • 2. CFTC Consumer Outreach Step 1 – Behavior Change Objectives Looking for the signs of persuasion before investing Checking the background of any financial product or person Reporting suspected or known incidents of fraud Step 2 – Target Audience Determination Aged 50-65 Men & Women University educated “Middle to upper” household income Primary investment decision maker in household Financially literate / familiar with financial products & services 2
    • 3. CFTC Consumer Outreach Step 3 – Message Testing & Framing Not Too or Not At All Concerned = 49% Very or Somewhat Concerned = 51% “Generally speaking, how concerned are you about unknowingly being part of a fraudulent investment?” 3Source: CFTC Investment Fraud Survey, February 2014. Sample: 1,107 investors ages 50-65 with household incomes of $60,000 or more, and who are financial decision makers in the household and familiar with a set number of common investment products. Results cannot be used to project attitudes and behaviors among the general investing public.
    • 4. CFTC Consumer Outreach “Once investment fraud is discovered, how much of the financial losses do you think a victim of fraud usually recovers?” Total (n=1,107) Concerned (n=542) Not Concerned (n=565) All 1% 2% 1% Most 2% 3% 2% About half 2% 3% 2% Less than half 43% 42% 44% None 42% 42% 42% Don’t know 9% 9% 9% 4
    • 5. CFTC Consumer Outreach Total (n=1,107) Concerned (n=542) Not Concerned (n=565) Yes 9% 12% 6% No 88% 83% 94% Don't Know 3% 5% 0% “Have you ever invested money in something that turned out to be fraudulent?” “If Yes: How many times have you invested money in something that turned out to be fraudulent?” Total (n=100) Concerned (n=65*) Not Concerned (n=35*) One time 75% 69% 86% Two times 16% 20% 9% Three times 6% 9% 0% More than three times 3% 2% 6% 5* Small base size
    • 6. CFTC Consumer Outreach Very or Somewhat Interesting Strongly or Somewhat Agree it is Believable Strongly or Somewhat Agree it is Personally Relevant [Affirmation] Responsible investors are vigilant about not only researching the potential of an investment to deliver a good return but also the potential for an investment to be fraudulent 72% 85% 55% [Own Thinking] Even seasoned investors know they cannot afford to solely trust the judgment of friends and family without doing their own verification, including learning the signs of investment fraud. 71% 90% 53% [Need for lifelong learning] Financial fraud perpetrators constantly change their tactics and improve their schemes, making it important for even seasoned investors to stay one step ahead of the latest scams to protect themselves 69% 88% 49% [Risk] Learning more about how to identify and avoid investment fraud is one of the most important ways to assess the true risk in your investment portfolio, which will mean a huge difference in your retirement years 69% 79% 52% [Victim Identification] Experienced investors are prime targets for financial fraudsters because they have the confidence to take risks and the resources to make fraud worthwhile. 59% 67% 33% Among those “Not Concerned” 6
    • 7. CFTC Consumer Outreach Total (n=1,107) Concerned (n=542) Not Concerned (n=565) I would not recover any of my financial losses 31% 30% 31% Governmental authorities I would report to would not follow through on my complaint 26% 26 26% It will cost even more of my money to investigate 21% 21% 21% I would have to reveal details about my personal and financial information to authorities 7% 8% 6% I could falsely accuse someone and ruin their career 6% 6% 6% Reporting will take up too much of my personal time 5% 4% 5% Other/None of the above 5% 4% 5% “Which of the following, if any, would you be most concerned about when it comes to reporting suspected fraud? Please pick the top 2.” 7
    • 8. CFTC Consumer Outreach Total (n=1,107) Concerned (n=542) Not Concerned (n=565) Personally interview 46% 49% 44% Review performance history 38% 46% 31% Find affiliation with known investment firms 34% 37% 31% Confirm certifications and education 30% 36% 24% Talk to references 30% 35% 26% Get a referral from a past client 28% 30% 27% Perform a general internet search on advisor 27% 32% 23% Look for any past violations from the government 22% 28% 17% None of these 3% 2% 4% Do not use a professional financial advisor 25% 20% 30% “Which of the following do you generally do when selecting a professional financial advisor? Please select all that apply” 8
    • 9. CFTC Consumer Outreach Step 4 – Outreach Strategy & Graphics 9
    • 10. CFTC Consumer Outreach Anti-fraud Campaign Development Step 1 – Desired Behavior Change Determination -- √ Step 2 – Target Audience Identification -- √ Step 3 – Message Testing & Framing -- √  Nine qualitative focus groups  Quantitative survey report and “message style guide” due March Step 4 – Outreach Strategy & Graphics -- May  Channels that reach the target audiences  When, where, and how to utilize these channels  Measurement instruments for each channel Step 5 – Outreach Implementation – June 10
    • 11. U.S. Commodity Futures Trading Commission Consumer Outreach Office Michael Herndon Consumer Outreach Officer 1-202-418-5242 Newsletter subscription – 11