FINANCIAL EDUCATION: THE STAGECOACH AND THE HIGHWAYMAN

1. FINANCIAL EDUCATION: THE STAGECOACH AND THE HIGHWAYMAN Caroline Bradley University of Miami School of Law cbradley@law.miami.edu http://www.blenderlaw.umlaw.net

2. The Need for Financial Education • retirement provision • consumer debt • mortgages • credit cards • consumers make bad decisions • consumers don’t shop around • biases • consumers don’t use regulatory disclosures properly

3. How to provide financial education • in school / post-school • public sector/private sector • fsa business plan 2008/09: “We will continue to roll out our ‘Delivering Change’ plan, a five-year strategy to improve the financial capability of UK consumers, which we are now around half-way through. By the end of the year, we aim to have reached a further three million people, taking the total reached to six million against our overall target of ten million by 2011.

4. Fun Financial Education: Comics • federal reserve board comics series • http://www.learnwellgraphics.com/

5. Fun Financial Education: cartoons fsa: mortgages laid bare, 2005

6. Fun Financial Education: Serious Games • math games: http://www.moneyopolis.org • budgeting: http://www.mysavingsquest.com/ • monetary policy simulation http://www.rbnz.govt.nz/education/0116902.htm

7. Virtual Worlds • “virtual worlds are places where the imaginary meets the real.” • Richard Bartle, Designing Virtual Worlds, 2004 • synthetic worlds • mmorgs

8. Money in Virtual Worlds • real money trading • gold farming • eve online: corporations • second life: stock exchanges but not banks • neopets: stock market

9. Wells Fargo’s Stagecoach Island • a social space – not just a game • visitors can “explore the island and its hidden secrets, connect with friends and make new ones, and at the same time learn smart money management” • http://blog.wellsfargo.com/StagecoachIsland/what_is_SiC.html

10. Wells Fargo: Hands On Banking • stagecoach island financial education content comes from • https://www.wellsfargo.com/handsonbanking/ • Hands on Banking is sponsored and developed by Wells Fargo to serve our communities. The site contains no advertising and does not require or collect any personal information. • We promise to keep it short and simple, and show you a good time along the way

11. Stagecoach Island 2005 • Wells Fargo’s vision is to satisfy all its customers’ financial needs and help them succeed financially and the Stagecoach Island game is an extension of the company’s continuing efforts to offer critically needed financial education to young people. The online game is part of a broad, multi-faceted financial education program for young adults called We Take the Fun of Money SeriouslySM . Wells Fargo is hosting a series of live We Take the Fun of Money Seriously events throughout Austin and San Diego during September and October where young adults can participate in various activities — from karaoke and trivia games to athletic challenges and photo booths — and win prizes while learning about banking basics. Event participants will receive the web address and a unique login code for the Stagecoach Island software and will have the opportunity to play the online game at home for 30 days. • Wells Fargo developed the We Take the Fun of Money Seriously program and the Stagecoach Island game with experiential marketing agency Swivel Media based in San Francisco. “Education and entertainment are just beginning to merge. We’re excited to be involved with Wells Fargo’s Stagecoach Island, a project that really addresses young peoples’ need to learn in an engaging and realistic setting,” said Swivel Media’s founder and creative director, Erik Hauser. “We’re using the most sophisticated virtual gaming platform from Linden Lab, the creators of Second Life, to provide a highly engaging experience. We want today’s youth to learn how to manage their finances and how to handle credit — and we want them to have fun doing it.” • https://www.wellsfargo.com/press/20050914_StagecoachIsland.jhtml?year=2005&_requestid=56596

12. SI Experience • Learning Lounge • Congratulations! You've answered three questions correctly! You've earned another §45 for Stagecoach Island fun. To collect your winnings, close your browser window and go to any Stagecoach Island ATM. Come back again next week for another chance to learn and earn. • Here are the correct answers for this quiz • Q: What banking transaction can't you do online? • A: Withdraw money • Q: What can you always look at when banking online? • A: All of the above • Q: When will you see your transaction online? • A: Almost immediately • Want to win real-life rewards? Visit www.handsonbanking.org - a site packed with free money management tools to help you achieve your financial dreams!

13. Jobs in SI - 2007 • bronze level $2000 per month • log in 1X per pay period to get paid • e.g. Jack of all Trades Fix things that are broken around the island, report to Cassie and the Stagecoach Island team if something is wrong or out of place • silver level $3000 per month • log in 2X per pay period to get paid • e.g. Rock Star You’re just cool - rock out • gold level $4000 per month • log in 3X per pay period to get paid • e.g. Island Detective Keep order on the island, get police reports and inform Cassie or the Stagecoach Island Team of anything critical happening in world

14. Conflicting objectives of SI • SI has a dual purpose: the ostensible purpose of providing financial education and the underlying purpose of recruiting future customers • Does this undermine the usefulness of the financial education SI provides?

15. Conflicts of interest I • PriceWaterhouseCoopers, Precious Plastic 2008 (Nov. 2007) • …in improving the average credit risk of their books, issuers are likely to experience changes in the shape of their income statement. They can expect a reduction in both interest and fee income. Typically one would expect to achieve a lower interest margin on higher-quality accounts reflecting reduced credit risk. Combined with the lower propensity of such customers to revolve their balances, issuers are likely to experience increasing pressure on interest income. Since the probability of delinquency falls as average credit quality improves, income arising from late and over-limit fees would also be expected to fall as impairment performance improves.

16. Conflicts of interest II • Financial service providers may make their products so complicated that consumers can’t make effective choices • Elisabetta Iossa, Modelling changes to consumer welfare caused by reduced price transparency, FSA Occasional Paper 26 (2007)

17. Questions • does SI provide effective financial education? • does the VW format increase problems of conflicting interests? • where is the stagecoach?