1. 1 National Conference on Children and Youth Savings: Market Development Plenary Session June 15, 2009 Hosted by CFED, Brooklyn, NY June 14-16, 2009

2. 2 Introduction- Lisa Mensah  Session Panelists : Bill Ray, CEO Bank Plus, Jackson, MS (video message). Dr. Lew Mandell, Kermit O. Hanson Visiting Professor of Finance and Business Economics at the University of Washington. Michael Johnston, Executive Vice President of The Capital Group Companies, New York, NY. David White, Chief Executive of The Children’s Mutual, United Kingdom.

3. 3 Introduction – Lisa Mensah  Market Development Exploring how the private sector can rise to the challenge of building a system of accounts for every child in America.  Balancing the roles of Government and the private financial sector to deliver a national child accounts policy.  Benefits of partnering with the private sector  Moment is ripe to “Add the Kids”!

4. 4 BankPlus Video- Bill Ray and Max Yates

5. 5 The Importance of Utilizing the Private Sector - Dr. Lew Mandell  The Investment Gap : Equities are the only way to build significant wealth. Initial $500 grant invested at 2% (after fees) in a fixed income account would equal just $714 after 18 years. At 8% (after fees) in an equity account this would be nearly $2,000. If families contributed $50/month in addition would reach $13,703 and equity would be $26,105 after 18 years or nearly twice as much.

6. 6 The Importance of Utilizing the Private Sector  The Private Sector Advantage: The private sector has the motivation to drive account contributions:  Fee generation from more mature accounts (remember that everything won’t be withdrawn at age 18).  Developing customers for life. With nationwide banking and ATM’s, there is little reason to switch away from first account relationship.  Ability to cross-sell other products over the life cycle including investment, loan, and risk-management products. The private sector has the scale and experience to invest and manage the funds at low cost. The simplicity of the product helps reduce marketing costs.

7. 7 The Importance of Utilizing the Private Sector  Impact of child accounts on school age children and economic education in our nation’s schools : Financial education seems to work best with younger children. Good habits are easier to form when children are less subject to peer-generated consumption patterns. Having an account gives a child both “ownership” and relevant experience.

8. 8 Child Accounts and the Private Financial Sector - Michael Johnston  The significance of the Child Account opportunity The perspective of the mutual fund industry.  What it would take for industry to rise to the challenge of delivering child accounts $500 starter account contribution Simplified and protected investment products Appropriate fee cap Restricted, efficient system of withdrawals at age 18  How the industry CAN run the market to reach all American kids System of players works now, but doesn’t include the kids. Potential roles and interactions of different industry players.

9. 9 “2020 Vision” David White Chief Executive Officer

10. 10 2020 Vision Imagine a world where - Opportunity, choice, control (not compromised) 18 years: lowest income family:$ 3,500 18 years: minimum: $ 1,700 45-50%: $16,000 Imagine no more!

11. 11 UK Government Policy Thomas Paine, Michael Sherraden IPPR Tony Blair and Gordon Brown An asset Savings habit Financial education The Child Trust Fund Introduced January 2005 All children born since September 1, 2002 Today 4.5 million open accounts

12. 12 Child Trust Fund – How it works 1.Register child’s birth 2.Apply for Child Benefit 3.Government issues information and certificate for £250 / $400

13. 13 4.Parents/Guardians choose provider (default after 1 year) 5.40 Providers, 100 distributors Child Trust Fund – How it works

14. 14 6.Low income family (below $25,000) – another $400 7.$400 / $800 again at age 7 8.Family, anyone can add up to $2000pa 9.Consumer protection (universal) Price cap, 1.5% pa Invest in stocks and shares (tax-free) Lifestyle Child Trust Fund – How it works

15. 15 So does it work? YES!!

16. 16 The Children’s Mutual Market leader 25% share 70 primary schools in May Web, post, telephone 75% share of voice Data

17. 17 The Children’s Mutual Data (75% Opening rate) Lump sums: 5.6% @ $670 47%-50% open direct deposit transfer Direct deposit average: $40 per month Year on year increases Recession proof (ish!) $16,000 at 18

18. 18 Success and Improving 200% increase in savers 60% increase in savings 30% of low income families save Christmas, birthdays, baptisms Grandparents 10 x £10

19. 19 What happens at 18? Freedom of use, tax free Potential for incentives Automatic rollover into ‘ISA’ Financial education Government initiative “My Money” in schools

20. 20 Private Sector Universal – can you ignore it? Live or Die! Competition Escalator Pocket money Child friendly statements Cross-sell Wills Life Assurance More 25%, 30% of new adults with money!

21. 21 Give Every Child Every Chance ….. To fulfil their dreams and aspirations To have opportunity and choice To avoid economic crisis A stake in corporate America

22. 22 Ask 100 Senators Would you like to change the savings habits of the nation in less than a generation? What would it cost?

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