New Report from NYC on the "Supervitamin Effect" and Financial Counseling

New York City's Department of Consumer Affairs (NYCDCA) released the second report in its "Supervitamin series." (Read more about the first report in the series here.) From the press release, the new report "examines the efforts of New York City’s Office of Financial Empowerment (OFE) to standardize the delivery of financial counseling, set ambitious client outcome measurement standards, implement a rigorous data tracking system, and professionalize financial counselor trainings." New York has been a leader of efforts to incorporate financial empowerment and asset building perspectives into public programs citywide: their "supervitamin" approach. This work has served as a model for innovation in city government efforts across the country.

In this latest report, the OFE makes the case that the time has come to professionalize and standardize the field of financial counseling for low-income consumers. A complex financial product marketplace coupled with the recent recession and the ongoing economic hardship of low- and middle-income families makes financial counseling all the more important and valuable. However, without a consistent approach or any ability to track outcomes, financial counseling efforts may vary in quality and potentially expose economically vulnerable clients to financial risks. The report goes on to detail the steps OFE has taken to professionalize financial education and counseling at its Financial Empowerment Centers through a course specifically developed to help counselors address the unique needs of lower-income clients. Finally, OFE reports on progress towards setting national standards for financial counseling.

As OFE's report notes, government support is the next key driver to "moving the field toward professionalization" and recommends that the federal government play a role in establishing certification criteria and evaluating the success of financial counseling efforts. Fortunately, enthusiasm for building financially capable communities is high and the role government can play in building Americans’ financial capability – including setting standards for financial counseling – is well recognized.  However, getting to that end goal of setting standards for various types of financial capability building activities will likely take some time. The U.S. Government Accountability Office (GAO) assessed that a federal certification process for financial capability building (a.k.a. “financial literacy” in the GAO’s report) programs is feasible, but difficult as there are many unanswered questions underlying the process and past experiences demonstrating challenges in certification programs.     

In the meantime, NYCDCA and specifically the Office of Financial Empowerment continue to push the envelope on what is possible for city-level social services. The diversity of political and economic circumstances and population needs across the country may pose challenges in duplicating the New York City experience, but their ability to "think big" and innovate is already helping to reshape the way governments think about serving their constituents. Keep up with NYCDCA's good work on Twitter or by visiting their website.