An irreverent Wall Street Blog
The FINRA Investor Education Foundation Is A Lonely Hunter
March 24, 2021
If you visit the online "Mission" page of the FINRA Investor Education Foundation
https://www.finrafoundation.org/about-us, you will find this statement:
https://www.finrafoundation.org/about-us, you will find this statement:
Established in 2003 by the Financial Industry Regulatory Authority, the FINRA Investor Education Foundation empowers underserved Americans with the knowledge, skills and tools to make sound financial decisions throughout life.The Foundation accomplishes this mission through educational programs and research that help consumers achieve their financial goals and that protect them in a complex and dynamic world.FINRA, the Financial Industry Regulatory Authority, regulates all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity.
As I have written in the past, and with some frequency, I am no fan of the FINRA Investor Education Foundation. Ultimately, the Foundation may have been well-intended but my guess is that the core motivation was publicity. You know, how can we burnish the name of "FINRA?" Oh, for starters, let's set up something to do with something nebulous -- any suggestions? Oh, that's a good one, lemme write that down "investor education." Yes, I am a cynic when it comes to any company's efforts to create a foundation. The way I judge the sincerity of the undertaking is by its deeds. In that aspect, the FINRA Investor Education Foundation fails. Repeatedly.
As I noted in "FINRA Foundation To Empower The Underserved But Batteries Not Included" (BrokeAndBroker.com Blog / June 28, 2019"
http://www.brokeandbroker.com/4665/finra-foundation-underserved/
http://www.brokeandbroker.com/4665/finra-foundation-underserved/
I'm tired. I'm tired of studies. I'm tired of special reports. I'm tired of awards. I'm tired of prizes. I'm tired of endowments. I'm tired of foundations. I'm tired of initiatives. I'm tired of pilot projects. I'm tired of mission statements. I'm tired of committees and subcommittees. I'm tired of panels and advisory boards. I'm tired of blue-ribbon experts preparing white papers. I'm tired of updates about proposals and listening tours. Which leads me to the object of my jeremiad today: the "FINRA Investor Education Foundation". . .
In gauging the purported accomplishments of the FINRA Foundation, let's consider the list of press releases issued by that organization in 2021 through March 10, 2021:
https://www.finrafoundation.org/news:
https://www.finrafoundation.org/news:
March 10, 2021New Research: Repeated Exposure to Fraud Awareness Education Reduces Susceptibility to Investment ScamsWhile the economic fallout caused by COVID-19 has led to a significant rise in tips, complaints and referrals involving investment scams, new research from the FINRA Investor Education Foundation (FINRA Foundation) and the Center for Economic and Social Research (CESR) provides evidence that repeated exposure to concise, online educational interventions can reduce susceptibility to investment fraud among U.S. adults.March 4, 2021First-of its-Kind Study Identifies Drivers of Chronic Fraud VictimizationAARP, the FINRA Investor Education Foundation (FINRA Foundation) and Heart+Mind Strategies today released Addressing the Challenge of Chronic Fraud Victimization, a study that identifies evidence-based ways to help repeat victims of financial fraud and their families. The study, published in recognition of National Consumer Protection Week (NCPW), used a behavior model to help illuminate factors that may contribute to repeat or chronic victimization by financial fraud schemes.March 1, 2021FINRA Foundation Seeks Applicants for Military Spouse FellowshipStarting today, the FINRA Investor Education Foundation Military Spouse Fellowship is accepting applications for its 2021 class of financial FINRA Fellows - a unique program designed to increase the financial capability of U.S. service members and their families.February 16, 2021New Research: Four in 10 American Households Had Difficulty Withstanding a Financial Crisis Before COVID-19Well before the COVID-19 pandemic, nearly four in 10 households lacked financial resilience, making them vulnerable to financial hardships, including those associated with the current pandemic or future financial crises, according to a report from the FINRA Investor Education Foundation. Meanwhile, fewer than two in 10 households appeared to be financially resilient.February 2, 2021New Research: Global Pandemic Brings Surge of New and Experienced Retail Investors Into the Stock MarketIn a year when a pandemic gripped the world, beginning and experienced retail investors flocked to the stock market using taxable, non-retirement investment accounts, according to new research by the FINRA Investor Education Foundation (FINRA Foundation) and NORC at the University of Chicago.
So . . . just what is the Foundation doing to accomplish its mission of empowering Americans to make sound financial decisions?
If we go by the five press releases above, the Foundation funds research, releases studies, and seeks applicants for a fellowship. Not exactly my idea of empowerment. More like self-serving fluff. Sounds good. Looks good. But when you actually delve into the guts of the research and studies, it's hard not to roll your eyes before they glaze over. Frankly, over the years, the various reports and studies tend to be more laughable than helpful. A glaring example was noted in "Dubious FINRA Study Finds Female Arkansas Prison Inmates Are Usually Poor And Financially Illiterate" (BrokeAndBroker.com Blog / July 24, 2020"
http://www.brokeandbroker.com/5343/finra-arkansas-inmates/
http://www.brokeandbroker.com/5343/finra-arkansas-inmates/
In commenting about the FINRA Arkansas Inmate study, I noted in part that:
Oh for godsakes, really? Another dubious study promoted by the FINRA Investor Education Foundation. Now, please, don't get me wrong. I wholeheartedly endorse studies about gender, racial, and ethnic discrimination and harassment, and how such pernicious conduct manifests itself financially and economically. If you are familiar with my published body of work, you will find that I frequently champion victims of Wall Street discriminatory practices. That being said, just how much money did FINRA spend on this study and its promotion? What exactly was the unanticipated, surprising results of the study? Did FINRA and the authors expect that a survey of 515 Arkansas inmates would show that said population ranks among the top 1% of wealthy individuals? Did those investigating this group expect that the inmates were financially literate or would have impressive financial assets? Were the investigators anticipating that incarcerated women would have higher financial literacy and more financial assets than incarcerated men?Not to be too cynical or snarky here (but I'm going to be just that) but there are some postulates that don't require expensive studies to confirm. For example, I imagine that incarcerated men and women have, on average, fewer Frequent Flyer Miles than those who have never been incarcerated; and, similarly, that said inmate population has on a percentage basis fewer PhDs than in the non-inmate population. Frankly, if FINRA has money to throw around on such studies, I would have much preferred that the funds were earmarked for outright financial grants to the Arkansas female inmates rather than for studies about their dire financial straits.
All of which is past. All of which is prologue.
Today, the focus of my ire is on "The Relation of Loneliness and
Cognition With Financial and
Healthcare Decision Making in
Older Persons" (Insights: Financial Capability / March 2021 / FINRA Investor Education Foundation)
https://www.finrafoundation.org/sites/finrafoundation/files/relation-loneliness-cognition-financial-decisions.pdf
In the March 2021 iteration of more dubious and breathless research from the Foundation, we learn the researchers examined "the relation of loneliness and cognition with financial and healthcare decision making among 1,121 older adults."
Stop for a second and think about that. Just what exactly is the scientific, clinical definition of "loneliness?"
In 2021, in the midst of one of the worst healthcare crises in human history, the Foundation is spending money on a study of the relation of loneliness and cognition? What was the unexpected, profound findings of such a study that warranted an investment by FINRA? Would any intelligent, rational individual expect that feeling lonely would enhance an "older" adult's financial and healthcare decision making? Were there no other more compelling topics for FINRA's grant money or funding? As to the actual findings of this study, they not only border on incomprehensible but serve as a stunning rebuke of the Foundation's understanding of its purported mission:
FindingsParticipants on average correctly answered 8 of 12 items on the financial and healthcare decision-making measure (67 percent), and their average score on the loneliness scale was 2.2 (Range: 1 - 5). Older age, more depressive symptoms, more medical conditions, lower education, lower income, and fewer social contacts were associated with poorer decision making. Women tended to score lower on the decision-making measure than men.After accounting for age, sex, and education, lower cognition was associated with poorer financial and healthcare decision making. Loneliness was not associated with decision making among older adults, in general; however, loneliness was detrimental to decision making among those older adults with low cognition. To illustrate this finding, we examined the effect of loneliness on decision making for participants with average cognition (50th percentile) and low cognition (10th percentile). For participants with average cognition, a one-point increase on the loneliness scale only corresponded to a 0.02- point reduction in decision making. By contrast, for participants with low cognition, a one-point increase on the loneliness scale corresponded to a 0.35-point reduction in decision making (Figure 2).To ensure that these findings were not due to other potentially relevant factors, we conducted analyses that accounted for depressive symptoms, social network size, medical conditions, and income. We observed the same results after accounting for these other factors, which increases confidence that our findings are not due to factors that are conceptually similar to loneliness or might otherwise shape decision making.
at Page 3 of Insights Financial Capability
Go ahead -- you try to explain any of that gobbledygook to someone else. Make sure to work in all that stuff about percentiles and point reductions. I mean, seriously, what the hell are you talking about?
A 1 to 5 "loneliness scale." My, how scientific and rigorous a scale! Study participants answered 8 out of 12 questions correctly and had a 2.2 on the loneliness scale. The stunning conclusion is that:
Older age, more depressive symptoms, more medical conditions, lower education, lower income, and fewer social contacts were associated with poorer decision making. Women tended to score lower on the decision-making measure than men.
Let's put that mumbo jumbo of pseudo-science and bloviation into a simpler conclusion. Folks who are elderly, depressed, ill, less-educated, poorer, and socially isolated may be more likely to feel lonely -- duh. Moreover, that same population makes poorer decisions -- ya think? Oh, and by the way, women scored lower than men on decision making. Of course, the researchers anticipate my dismissive attitude and admonish us that:
To ensure that these findings were not due to other potentially relevant factors, we conducted analyses that accounted for depressive symptoms, social network size, medical conditions, and income. We observed the same results after accounting for these other factors, which increases confidence that our findings are not due to factors that are conceptually similar to loneliness or might otherwise shape decision making.
You wanted to "ensure" that the findings were "not due to other potentially relevant factors?" Accordingly, the research then "accounted for depressive symptoms, social network size, medical conditions, and income." How does one "account" for those other factors? Doesn't depression, lack of friends, illness, and financial issues contribute to the feeling of "loneliness?" If I'm not feeling depressed, if I have a robust social network, if I'm the picture of health, and if I have cash coming out of my happy, robust, and healthy kazoo, how likely is it that I'm going to be feeling "lonely," and why would you even be studying such a state of contentment? Oh, and when you get a chance, please tell me what "factors" are "conceptually similar to loneliness." Frankly, I can tell when smoke is being blown up my ass when I come across prose such as "factors that are conceptually similar to loneliness."
Look -- I am not questioning the sincerity of anyone involved with the research. I am not questioning that loneliness exists or that it negatively impacts our lives. I am questioning why the FINRA Investor Education Foundation always seems to be funding such research and doesn't pursue more effective ways of discharging its mandate.
In 2020 we started digging graves and burying folks who succumbed to COVID. The pandemic remains extant in 2021. This is not the time for FINRA or its Foundation to make questionable investments in ephemeral studies. I would much prefer that FINRA write out a check and donate the money to an Alzheimer's care facility, a domestic violence project, or a suicide prevention hotline rather than essentially throw the cash to the winds and watch it flutter and scatter.