Video Clip Transcript: Carl George Presentation
Best Practices Symposium - March 29, 2005

Justin Draeger:
I want to introduce our first keynote speaker, Carl George. Mr. George received his master’s in accounting and management and his bachelor’s of science in accounting from Ball State University, and this last October he was the recipient of the Ball State, Miller College of Business, Alumni Award of Distinction. He is a Certified Public Accountant and currently, he is the Chairman of the National CPA Financial Literacy Commission. Mr. George recently spoke at NCHELP, and I think he has a lot of good insights for us into financial literacy and financial fitness. So please join me in welcoming Mr. George.
 
Carl George:
You know, I’m trying to picture the student that has 58 credit cards. I’m trying to picture the wallet. Huh. Justin, did you say that this is being taped? Well then I need to go on record. This is not about financial literacy, but you have to understand, I’m from Illinois. I have two sons that graduated from the University of Illinois, and I’m about, what, sixty miles from Lansing? And since we’re on record, I see a prediction of the final game Monday night, a week from today. Well, not today, but next Monday – Illinois/Michigan State. I mean I think that’s a law. I also have another prediction, but I think I’ll just get to my presentation at this point. That’s great though, for the Big Ten. We’re supposed to be so weak, but what a great job everybody has done.
 
I’m very pleased to be here to talk about financial literacy, and I’d like to kind of frame it out as financial illiteracy, if you will – i.e., the crisis. I also want you to know that I’m the warm-up act. I’m a volunteer. I’m the CEO of a CPA firm. I chair this commission. It’s a volunteer position. But I’m the warm-up act for Laura, this afternoon, who is the Executive Director of the Jump$tart Coalition. She does this stuff every day, and she’s passionate about it. I think you’ll really be pleased with the remarks that she has.
  
What I’d like to do today in this brief time is just talk to you about two things. I’d like to speak about what the CPAs are doing. And you might say, “Well, what’s that got to do with me?” I’d like to segue into what the CPAs are doing, and kind of think about what you can do, and I know you do it on a daily basis. So in a way, I’m preaching to the choir, and I know that. But maybe if I can give you a little insight into what we’re doing and you can maybe take a look at some of the tools that we have, it may help you in your jobs as you deal with some of these issues on a daily basis.
 
So I’m here for two reasons. To talk a little bit about what the 350 thousand-member group, the American Institute of CPAs, is doing. And secondly, and maybe more importantly, is to go over some ways that you can come into our Web sites, pick up some tools, get some information that will help you do a better job, help you counsel, and help you organize your efforts a little bit better.
 
So let’s talk about the five steps to get involved if you will, with what I consider a real crisis in our country. I think the first way to get involved is to understand. And again, I recognize that I’m preaching to the choir. But I think if we can just kind of come together and get a rope around this for a little while and understand what we’re dealing with. This is a huge, huge issue in our country. And it crosses all barriers. It’s not about low-income people having a financial crisis. It’s about the rich, it’s about people in all walks of life – people who are poor, people who are rich – all walks of life having some issues. It’s about business issues in the financial literacy crisis. It’s about individuals that are part of this financial literacy crisis.
 
So I always like to start by teeing up what are some real startling facts. In fact, Justin started it by talking about what’s taking place at Ohio State University and a whole lot of other places. But, to give you some input in terms of what’s happening out there, just to put it into perspective, in 2003 and in 2004 we’ve had personal bankruptcies at an all-time high level – 1.6 million Americans filing in both 2003 and 2004. Actually, 2004 was just slightly lower, but not enough to make a difference. So in two years, 3.2 million individual bankruptcies in our country.
 
Now let me digress just for a second. Remember I just talked about my two sons who graduated from the U of I, and they’re in their 30s. I’m digressing because one of my sons is in that statistic in 2003. Now, they graduated with all kinds of degrees and things, but they decided that they were going to start a sports bar. I’m a CPA. I’ve been in practice for 35 years, and my standard answer to my clients when they said, “You know what? I want to have a bar or a restaurant,” my standard pat answer is, “Move on. Do something different.” Because the rate of failure is incredible, as we all know. Well, Matt and Andy decided they. . .you know, first of all, I’m a CPA. I’m a CEO of a firm. I’ve been in practice for 35 years, but I’m “dad.” So they didn’t listen – long story short. One of my sons, my oldest son, and his wife took bankruptcy because of that. I tell you that because it hits everybody. I was there advising and, of course, they weren’t listening. I was sitting by the sidelines watching this happen, and the feeling of not being able to help your own family – you can help to a certain degree – to get through this crisis. It really brought it home to me, and in fact, kind of shoved me into this whole financial literacy initiative of the American Institute of CPAs. Because, as I said, it crosses all walks of life – so just a little bit of a personal experience.
 
For every dollar Americans earn we’re spending – at least 43 percent of Americans – are spending $1.22. Now you try to figure that math. It does not work. A buck twenty-two for every dollar. Racking up tremendous debt. The average household credit card balance is $8,000 – a little bit over $8,000. You talked about the 58 credit cards held by that goon at Ohio State. The average number of credit cards in today’s American household is twelve. Now everybody’s thinking, “How many do I have?” Twelve credit cards per American household. That doesn’t mean it’s bad, because credit cards can be used the right way, obviously, but when you have a financial literacy crisis like this you really wonder about this perpetuation of plastic.
 
And you talk about the credit cards on college campuses. The average graduate goes away with three credit cards, and the average debt per credit card is $2,700. So the average graduate leaves college with over $8,000 in credit card debt which does not include student loans. It’s for pizzas and hold 'em tournaments and anything else they’re doing out there on college campuses. So think about that – the $8,000. So they’re in debt. Besides the loans and so on, they’re in as Justin said, unsecured consumer debt – $8,000 on the average. 
 
So how does this effect us? Obviously, somebody’s going to pick up this tab. In a lot of cases, (I’m sure the credit card companies understand this very, very, well) the parents come in and sweep those cards right away and pay them off because they don’t want their child who has just graduated to start out in the hole with a bad credit report. It may sweep them away, but not in all cases. We all know that. But it certainly does not solve the issue, i.e., the behavior. We’re talking about behaviors here, of all of us.
 
So just to kind of tee it up a little bit, the statistics are pretty startling. We wonder what’s going to happen down the road. So last year, the American Institute of CPAs, which is our national organization made up of 350 thousand CPAs, decided to do something about it in our way. We do kind of speak the financial language, so we’re kind of naturals to maybe get more involved than we have been – at least on an organized, official basis. 
 
So we conducted a Roper poll to assess what American’s attitudes about personal finances were and what their preparation would be for financial emergencies and unexpected expenses, retirement, etc. We surveyed more than a thousand respondents, and in a nutshell, we found that many, many Americans lack a basic understanding of how to prepare for their short-term and long-term financial needs. Just a couple of pieces of that survey: In terms of key financial terms, we found in that Roper poll that many Americans didn’t understand a lot of what we would think would be key financial terms, and in some cases, elementary financial terms. 
 
As you see, 49 percent – nearly half – have never heard of what a 401k plan is. Probably the most important retirement savings vehicle we have today. Plus 30 percent of Americans who have the opportunity to be in a 401k plan do not participate. Now you think about that. At least part of the participation in 401k plans is free money from your employer. So when CPAs advise clients when they ask, “Should I put money in a 401k plan?” it’s the one time we say, “Whatever you do get in the 401k plan, even if you have to borrow it.” Because it’s going to compound down the road, and it’s going to build into large balances hopefully, depending on markets and so on. But 30 percent of Americans that have the opportunity to participate do not. That’s a startling statistic. 
 
The survey also found that one in three Americans in two-income households don’t have financial contingency plans if one of the two loses their income. The reality of that is they are not prepared for common life crises that do happen to all of us should one lose their income. As you see, 36 percent of Americans where both parties earn income for the household do not have those contingency plans. That’s startling. 
 
The survey also found that medical emergencies would put many in debt. As you see from this slide, they speak to the lack of preparedness. In terms of how would they handle a medical emergency in excess of $15,000, you see that many would borrow, cash in investments, and God forbid, use a credit card. The survey also found that Americans were not prepared for unexpected major expenses beyond medical emergencies. Asked how they would handle that, as you can see, and I find this slide really shocking. It speaks to the reason that credit card debt and bankruptcies are so high. One quarter of Americans feel they would have to turn to bankruptcy to manage the unexpected major emergencies that they might incur. And over half would have to run to family members, which may or may not be good. It may be good if the family members are in good financial shape, but it may be compounding the financial or the family financial problem, if you think about the extended family as one unit. 
 
So some startling statistics. Let’s step back and answer the question. Again, I know I’m preaching to the choir. What is financial literacy? The ability to understand and make choices about those financial issues that are effecting our lives. If you look at that simple definition, a majority of Americans, and I repeat this, a majority of Americans would find themselves to be financially illiterate. That’s the crisis we’re dealing with. So that’s just some background. 
 
Now, the second way is for you to get involved in financial education. Again, I know you are. In effect, it’s the essence of this day for you. And it’s really your lives. You’re in a unique position to come across to a lot of Americans who need this financial help. So I applaud you for what you do. I also know that you have a really tough, tough job. I’m going to encourage you to work even more within your organization. And maybe after you go through this presentation and you see some of the tools and resources that we can offer you, perhaps you can think about getting within your organization and creating a more formalized effort to help with this crisis.
 
The third way you can get involved is to explore the American Institute of CPAs’ 360 Degrees of Financial Literacy resource. The 360 Degrees program is our profession’s response to this alarming crisis. And our mission is very simple. This is not about CPAs getting more fees. This is about what we want to give back. And we have the ability to give back. If you think about it with us, the CPAs, there’s 350 thousand CPAs in education, in public accounting, industry, government, private accounting, and so on. We have a network out there that is incredible. We cover every corner of the country. And if you think about 350 thousand CPAs, think about the millions of clients that we have. So we can extend this network out to our clients. We can extend this network out to the grade schools, the junior highs, the community colleges, the four-year colleges and universities, the Rotary clubs, and everything else. We have the natural network, the ability, to do this. Now I would be remiss to say that all 350 thousand are engaged, don’t get me wrong, but we’re getting there. We’ve been in existence for a year in terms of this financial literacy effort. And we will, along with a whole lot of great organizations, chip away at this and make a difference. We also recognize that this is a lifelong endeavor. This is not an overnight fix. We all know that, obviously, but what we want to do is mobilize the CPAs across the country. So if you would, and I’ll give you all of these Web sites. It’s on the last page of my presentation. There will be a number of Web sites throughout my presentation. They’re on the last page of the presentation, but one of our Web sites that you need to know about is 360financialliteracy.org. I’m going to take you there now in terms of some of the things we’re doing. As I said, “Why CPAs?” Well, you know, a lot of reasons. We want to give back. Americans do rate CPAs next to their doctors as their most trusted professionals, their advisors, if you will. Plus, naturally we have, again I’m not blowing our horn, I’m just telling you what our job description is. We have specialized training and knowledge in financial areas and matters. We can help make a difference and we want to. As I say, it’s kind of our language. 
 
Now, this is an interesting chart. The 360 Degrees program offers comprehensive financial information across every stage of life. We’ve decided to take the life cycle approach – the cradle to grave approach, and everything in between. This means that consumers – you folks – can find financial guidance tailored to a life situation that you see up here – eleven life situations that we’ve defined. And I’m going to kind of drill down into a couple of them for you. For example, if you are planning to buy a home you would go to “Home Ownership,” obviously. If you’re wanting to know more about how to plan for a child’s education you could visit “Parenthood” and find out a lot there. If you’d like to teach a child about personal finances, you’d go to “Childhood.” And we’ll drill down in a second. As I said our approach is the life cycle approach, the cradle to grave approach. 
 
This is an example of one of the Life Stage pages. This is the “College” page. It highlights the kind of information that college students might need: budgeting; understanding credit cards; paying for college, including financial aid; paying bills out of pocket, etc. If you look at the top, you see three blue buttons – “Articles,” “Tools,” and “FAQs.” I’m going to go to those in a second. But if you see the list here, if you go down vertically, there’s all kinds of information for you. 
 
I want to emphasize this Web site is a turnkey approach. So when you think about, “You know, I want to get involved, but I don’t have time to create.” I want you to understand that we took that into account. And we took it into account for our own people, because the way to get our CPAs mobilized is not to give them more work where they have to create. So we did all of the creating for them. You’ll find when you drill down into this Web site that you’ll get a lot of stuff. It’s already there for you in what I call “turnkey.” Now, take that and take your energy and do something with it. That’s what has to happen. 
 
If you look at the articles, there are over 300 articles on this Web site. So you can really drill down and find out a lot about this particular life cycle stage, which is “College,” by the way. One of eleven stages – “College” – 300 articles. In addition, there are over 500 frequently asked questions. This question is, “I’m thinking about placing my mother in a nursing home. Will Medicaid pay for her care?” Pretty basic stuff. This is not “College,” obviously, but this is another life stage. Pretty basic stuff, but things we all want to know. And in addition, there are over 260 financial tools like the one you see here. There are tools ranging from basic calculators, to college savings calculators, mortgage calculators, retirement calculators, compound interest calculators, and many, many more. So I encourage you to use these resources that are available on the Web site to help you help students understand these personal finance issues. 
 
We know for a fact that the CPAs are mobilized because we see the number of hits on our Web site. Since we launched the site in October, which is roughly six months ago, we’ve had over one million visits to our Web site for an average stay, by the way, of twenty minutes. Twenty million minutes, on the average, taking place there. So we know we’re getting traction. Hopefully we’re going to make some difference here. Hopefully people are taking these tools – these articles, these FAQs – and they’re taking them out, networking, not just the CPAs but others, because we’re trying to encourage other groups to use our Web site. People are using these to help themselves in their teaching. 
 
I also want to highlight two resources that happen to be on our “Childhood” page that can be used, not only for childhood, but basic adult education, too. One is Penny Wise. You see the red arrow points to those. Just click on “Penny Wise” or click on “Business Building Blocks.” Penny Wise teaches basic money management concepts such as the history of money, checking and savings accounts, ATMs, budgeting, etc. Business Building Blocks is aimed at the early high school crowd, and it provides information on teaching strategies in accounting principles such as financial planning, budgeting, and forecasting. So there’s some good stuff here. I might add also, that both of these programs, Penny Wise and Business Building Blocks were aired on PBS in 2003. And a DVD, by the way, of those shows if you would want it is available for free by emailing educat@aicpa.org. So if you want a DVD of Penny Wise or Business Building Blocks free of charge, email educat@aicpa.org. 
 
The good news is you don’t have to reinvent the wheel to get involved in financial education. Please use our toolkits to offer financial education to your customers, your clients. They provide ready-made financial literacy programs. They include PowerPoint® presentations with notes and accompanying handouts. So PowerPoint® presentations with speaker notes. Again, turnkey. We call these our CPA mobilization kits. Each kit is focused on a life stage, from childhood to retirement. 
 
Also, community programs are available in your states, your neighborhoods. Besides the American Institute of CPAs you can contact your state CPA society. And I will tell you that the Michigan society is very active in financial literacy. Each state and U.S. territory has a CPA society. So besides the national association, the American Institute, there are 54 other state societies, of which 44 of them are already engaged in some form of financial literacy program. And you see up here, there are three examples – one from Montana, one from New Jersey, and one from Michigan. The one in Michigan is “Living with Hospice,” a well-received program developed by the state society in the State of Michigan. So I encourage you to contact your state society.
 
The fourth way you can get involved is to get some help with free financial advice also. The American Institute is a partner with a number of groups in the Project for Financial Independence. It is located at consultaplanner.org. This program, which is very important, focuses on providing free financial advice to members of the public who cannot afford a financial advisor or who are facing a real financial crisis in their lives. It’s a free program for them. Currently, the program provides free guidance to qualifying individuals who are identified through a number of participating charitable organizations. I’m going to read the list real quickly. There are going to be adds to this list as we go, but currently if they are identified through an organization (not hard to do): American Cancer Society, Dress for Success, the Epilepsy Foundation, Habitat for Humanity, Mothers Against Drunk Driving, the National Coalition Against Domestic Violence, National Council on Problem Gambling, National Multiple Sclerosis Society, Volunteers of America, and there are others. There are a lot of ways to get free advice. You can help somebody find out if they qualify by visiting the “General Public” page. This is the General Public page here. Just follow the directions; look at the qualifying criteria. This is obviously in your handouts. If they qualify they would follow the steps. Again, the purpose is to provide free financial advice for those who can’t afford it and those who have an immediate crisis. So we are trying to handle this thing short-term, right now, and also deal with the long-term program. So I think it’s just outstanding.
 
Another program that is currently underway and is very successful is a partnership between the American Institute of CPAs and USA Today. USAtoday.com offers online chats on personal finances. These chats are staffed by CPAs who specialize in personal financial planning. Obviously, these are free. They answer consumers’ questions on a range of financial topics from income tax to retirement planning, and everything in between. More than 150 CPAs have participated in this program since we started it last May. They occur biweekly and are accessible through USA Today’s online “Money” page. Again – USAtoday.com. It’s a great program.
 
The fifth way you can get involved, kind of a culmination of everything I’m talking about, is to build a coalition within your own organization – whether it be in your office or whether it’s in your state organization, regional, whatever. Build a coalition. We decided (the institute) that the best way to deal with this whole crisis is to do it together as a coalition of 350 thousand members. We decided that for the National CPA Literacy Project, it would be best to get out and get our people mobilized and get the public mobilized to help with this crisis. So we built the leadership team. That leadership team is our commission and our grass roots team. And it’s working. We’ve only been “in business” on this project for a year, but I’ve seen just incredible progress made throughout the country. And again, the commission, all we do is provide some guidance and so on. The grass roots effort by our CPAs, our 350 thousand members, and you folks are what counts. You know what this country is made of. This country is built today on the grass roots getting together and making things happen – or not happen. So we know it works. These models work well. And again, one more time, I just encourage you to organize and make something happen within your particular office, organization, or whatever. As I said, here’s the Web site. You need to know these Web sites. Please go to them. There’s a lot of depth. And feel free to print, copy everything you want. Just use it. That’s what we want you to do. 
 
So there you have it. I hope this gives you a little bit of perspective from the CPAs’ prospective on what we feel is the financial literacy crisis in the country, and what we’re going to do about it, and what we hope that you will continue to do about. Because you’ve been living this for quite awhile, I know that. I hope you will use some of these tools – these articles, these FAQs, the Web sites, and so on to help you do your job better. Again, I want to thank you for the invitation to come here and help spread the word. I really enjoy speaking to different groups because I always learn something. I was telling Jim when he brought me over here from the airport that I always like to do these because I always learn something that I can take to the next group. I appreciate the time, and I wish you much luck today. Please go to our Web site. If you have questions, there are places to ask questions. You can actually go to a staff member at the American Institute also. It’s pretty user-friendly. So good luck today, and thank you very much.

End of Clip