ING Direct founder stresses importance of financial literacy

Although the United States has proved itself able to meet challenges from outside its borders, ING Direct founder Arkadi Kuhlmann said challenges from "within have been the most difficult to define and deal with."

"There seems to be an inability to find a consensus in all matters that affect our personal lives," Kuhlmann told an audience of financial leaders and consumer-advocacy groups Tuesday at the Hyatt at the Bellevue in Center City. The occasion was the annual community awards luncheon of the Philadelphia consumer organization Clarifi.

"Managing our money is at the heart of this challenge," said Kuhlmann, whose 11-year-old Internet bank has eight million depositors and $84 billion in deposits. "Financial literacy - bringing the discussion of money back to the kitchen table - is the key."

Ramped-up efforts by advocacy groups to promote financial literacy have followed the start of the recession and the collapse of the housing market.

That prompted the 45-year-old Delaware Valley Consumer Credit Counseling Agency to rebrand itself last year as Clarifi, said Patricia A. Hasson, the organization's president.

"The name change better describes what our organization does: promote lifelong financial literacy," Hasson said.

Last year was a difficult one for Clarifi and organizations like it, she said. Loss of federal funding forced it to cut its budget and staff, and reduced the number of its locations in the region from 19 to 12.

Yet in 2011, with few signs that the housing bust was abating and an increase in mortgage-rescue scams, Clarifi answered 34,000 first-time calls, an average of 150 a day, Hasson said. And it conducted 17,000 face-to-face counseling sessions with consumers, or about 70 a day.

At Clarifi's awards luncheon Tuesday, Stephen Brobek, a Swarthmore native and University of Pennsylvania graduate, was honored for his 32 years of service as executive director of the Consumer Federation of America.

Brobek, who founded America Saves, an effort to get more people to set money aside regularly in saving accounts, acknowledged that the effort had a long way to go.

"Only one-third of lower-income households and one-half of moderate-income homes have savings accounts," he said. "If households saved regularly, there would be no reason for payday loans or having credit-card debt."

Kuhlmann, whose firm was acquired by Capital One two weeks ago, said prosperity had made "us forget our parents' and grandparents' talk of an honest day's pay for an honest day's work."

Instead, when the situation becomes "impossible, we turn to the government for a fix," he said. "Federal and state governments create the wrong incentives with the best intentions, with negative consequences as a result. We all end up living beyond our means."

Although Kuhlmann supports the government's new Consumer Finance Protection Bureau, he said creating one would not have been necessary if the financial industry had not been "gaming the economic system to get an unfair advantage."

"We need principles, not regulation," he said. "We need to rebuild trust."

Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com, or follow on Twitter @alheavens.