Is there bipartisan support for the concept of financial inclusion, for all people in the U.S. to have access to basic wealth-building tools like retirement accounts?
The answer should be "yes" based on the results of the presidential election, according to a leading proponent of the new National Strategy for Financial Inclusion. Last month, the U.S. Treasury Department said that household financial security is a national priority deserving of coordinated action between the government and private-sector entities.
"We saw pretty clearly in the election last week that people's individual financial security and economic issues are on the top of people's minds because their budgets—their personal household budget—s what drives a lot of their interest in the things that they would like leaders in the country to focus on," says Tim Shaw, financial security policy director for the Aspen Institute thinktank in Washington, D.C. Aspen led a coalition of 117 organizations that first appealed for a federal strategy in 2022.
While financial inclusion requires access to basic banking services, that's just the starting point, Shaw says: It also needs to include long-term investing and savings options, access to wealth-building strategies and insurance, and metrics for measuring whether financial inclusion initiatives are succeeding.
The idea behind setting a national strategy is to get everyone on the same page, and to work together on each individual goal under the strategy, Shaw says. For example, improving access to and use of retirement savings accounts will require coordination between employers, the accountants that build retirement account systems, investment managers, and federal agencies like the IRS and Labor Department that set rules for tax treatment and how the accounts can be offered.
"Leaders from all of those systems have to work together toward a common goal," Shaw says. "Aligning to move in the same direction all together gives us better impact than just each organization setting up its own priorities."
Low-income families, rural communities and people in minority groups consistently experience the worst gaps in the financial system, according to a 2023 Aspen Institute report.
In general, some measures of financial inclusion have been trending in a positive direction, according to the report: Ninety-six percent of households have access to a transaction account, for example, and more than 53% of U.S. adults have a prime credit score.But the report also found stagnating or negative trends in areas such as long- and short-term savings, with only 45% of households accumulating six weeks' worth of liquid savings and 51% of working-age households haven't saved enough for retirement. "That's a system that's not working for everyone," Shaw says.
For human resources managers, one of the most important roles to play in the financial inclusion effort is to offer good information to employees at the moment they need it, Shaw says.
"Where people really need help is when they're faced with a financial decision. And employers are often in that spot," he says.
Employers and HR personnel can also help the cause by designing benefits that are easy to participate in, such as through automatic enrollment and re-enrollment. "Every individual has these stories, like 'Filling out five forms to get my retirement savings done' or to sign up for insurance," he says. "A lot of people just don't get over that hump."
Employers that don't yet offer retirement benefits—roughly one-third of all private-sector companies—should consider offering at least one of the cheaper options for retirement savings accounts with automatic enrollment, Shaw says.
For the employers that already offer retirement savings accounts, emergency savings accounts are becoming popular with employees. Emergency savings can be a tool that aids in building long-term wealth, Shaw says.Research shows that people with liquid emergency savings during the Covid pandemic were much less likely to draw down their retirement savings.
"It's important for surviving that shock now, but also for maintaining your wealth so that when you reach retirement, you have that set away and meet those goals," he says.
As for the fate of the National Strategy for Financial Inclusion, Shaw says he expects the Treasury Department's policy priorities will shift under the Trump administration, "but our hope is and our belief is that the goals that the strategy set out and the things that we've called for really are bipartisan."
"Whether or not someone has access to a retirement savings plan or emergency savings or a bank account is a thing that everyone can and should get behind. It'll just be a question of which aspect of the strategy and which part of the problem the new administration wants to focus on," he says.
