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As the head of a 28,000-member credit union, Shazia Manus realizes that a number of her institution’s members are walking a financial tightrope – and are compounding their problems by making bad decisions.

“We notice some members who may have a job with a state agency are going to payday lenders, bouncing their checks,” said Manus, president and CEO of Greater Iowa Credit Union in Ames. “These are highly educated white-collar professionals. You wouldn’t think that they would need (financial education), but they do.”

Seeing firsthand the need for better financial education was a key reason her credit union co-sponsored with Iowa State University, “Financial Literacy in the Heartland” on Nov. 11. The one-day forum held at the Hotel Fort Des Moines brought together 100 business leaders from throughout the state with five members of the President’s Advisory Council on Financial Literacy.

The nation’s economic crisis creates a new urgency for addressing the long-term challenge of improving financial literacy, said Tahira Hira, an ISU professor of personal finance and one of the 16 members of the advisory council. It’s a problem that extends to middle-class families, and there’s an increasing recognition that businesses must become more involved in educating their employees to become more financially literate.

“We may not agree on how we got to this point,” Hira told participants, “but something we can all agree on is that this is a very complex problem. One thing is for sure: We cannot operate as we have in the past and expect our economy to improve. People cannot change habits if they don’t understand the consequences of their actions.”

Other advisory council members that participated in the forum were Ted Beck, president and CEO of the National Endowment for Financial Education; John Hope Bryant, founder, chairman and CEO of Operation HOPE, a nonprofit social investment banking organization; Sharon Lechter, co-author of “Rich Dad, Poor Dad”; and Janet Parker, national president of the Society for Human Resource Management (SHRM).

Efforts within the past year to address financial literacy in the schools have served to further highlight the challenges. The average score on a financial literacy test taken by more than 46,000 high school students earlier this year was a failing grade – 55 percent.

A blueprint

Members of the advisory council, created in January by President George W. Bush, have participated in a number of forums across the country over the past several months. The council is gathering additional input for recommendations it plans to submit to U.S. Treasury Secretary Henry Paulson and President Bush by the end of the year.

“We hope this (report) will be a blueprint going forward from some of the brightest minds in the field,” said Dan Iannicola Jr., the Treasury Department’s deputy assistant secretary for financial education, who moderated the day’s discussions. He also serves as the advisory council’s executive director.

Iowa’s passage earlier this year of a law establishing a statewide core curriculum that incorporates financial literacy topics was an accomplishment noted by several of the advisory council’s members. That legislation, signed by Gov. Chet Culver on May 1, calls for Iowa high schools to develop implementation plans for the new curriculum by July 1, 2010, and elementary schools by July 1, 2012.

Bryant, the advisory council’s vice chairman, noted that 70 percent of the $14 trillion U.S. economy is driven by consumer spending. “If you have a global economy balanced on the backs of consumers, and these consumers are not financially literate, you have a house of cards,” he said. His organization, Operation HOPE, has raised more than $400 million from the private sector to fund programs for low-income residents in 51 communities and in South Africa. This week, it plans to launch “5 Million Kids,” a program to provide a bank account and financial literacy course to 5 million low-income children.

Among U.S. adults, more than 40 million don’t have bank accounts, Bryant noted. “And you have check-cashing companies charging them high rates to cash very low-risk government checks. What if all of these people had access to bank or credit union accounts?” Among the council’s proposed recommendations is to mandate that every American have the right to an electronic, debit-card-accessible bank account backed by the Federal Deposit Insurance Corp.

Employers can play an important role in advancing financial literacy, Parker said. In addition to her role with SHRM, she is executive vice president for human resources for Regions Financial Corp. in Birmingham, Ala., and chairs the advisory council’s workplace education subcommittee.

“Similar to health care, people are realizing they have to take more responsibility for their own financial knowledge,” Parker said. Though most employers now provide financial counseling through their employee assistance programs, “what we hope to accomplish is that it moves from a reactive to a proactive approach.”

Cara Heiden, co-president of Wells Fargo Home Mortgage in West Des Moines, said her company has provided “a wealth of educational material” to the public to promote financial literacy. For example, it distributed 250,000 free copies of its Hands on Banking program, an online money management tutorial, on compact disc in the past year. One of Wells Fargo’s immediate goals is to “debunk myths” that loans are unavailable to consumers, she said.

The participants in the forum maintained that lack of financial literacy is not a problem limited to low-income Americans, Rob Denson, president of Des Moines Area Community College, said afterwards.

“When I think of financial literacy, so often I think of low-income individuals,” Denson said. “It was really stressed that financial illiteracy doesn’t discriminate.”

DMACC last year contracted with ISU to provide financial literacy counseling resources to its faculty and staff, and also provides financial coaching for students at no charge. Denson said DMACC’s leadership will consider whether more can be done to promote financial literacy.

Manus said Greater Iowa Credit Union last year partnered with Balance, a nationally accredited “financial fitness” program that provides a range of educational services free of charge to its members, “but there is still a tremendous need.” The increasing complexity of financial services and products has made the task of advancing financial literacy more difficult, she said.

“We notice within our membership that people tend to go to their family and friends for financial advice,” Manus said. “We just need to make ourselves more approachable and we need to make our product delivery channels more simple so that the average consumer can understand them.”