Online Investment Education for Farm Households

Jason Johnson - Texas AgriLife ExtensionRuth Hambleton - University of Illinois Extension Bob Wells and Tim Eggers - Iowa State University

Nancy Porter - University of Clemson

The project is guided by a team of 14 members from 10 states and USDA/CSREES. http://collaborate.extension.org/wiki/OIE_Team

Percent of Agricultural Producers Experiencing Financial Stress Now or Will Within the Next 3 Years

Experiencing Stress Now

5% or

less

6% to

10%

11% to

20%

21% to

30%

More than 30%

0%

5%

10%

15%

20%

25%

30%

35%

40%

NationallyTexas

Will Experience Stress – Next 3 Yrs.

5% or

less

6% to

10%

11% to

20%

21% to

30%

More than 30%

0%

5%

10%

15%

20%

25%

30%

35%

40%

NationallyTexas

Changes in Documentation Required of Producers Requesting Financing from Lenders in Recent Months

Decreased No Change Increased Slightly Increased Substantially

1%

25%

57%

17%

7%

17%

59%

17%

Nationally Texas

• Investing for Your Future• Online Investor Education for Farm Households– Financial Industry Regulatory Authority

Investor Education Foundation• Annie’s Project role in piloting IFYF for Farm

Families

Farm Crew:Tim Eggers, Ruth Hambleton, Bob Wells, and Jason Johnson

What We’ve Learned – Internet Access

What We’ve Learned – Internet Usage

What We’ve Learned – Products & Investments

What We’ve Learned – Investment Portfolios

Asset Allocation and the “Lessons of Monopoly.”

IFYF for Farm Families Units 1-11Increased confidence in off farm investment principles and products

Activity #1 - Complete the Emergency Financial First Aid Kit.Objective - Identify and organize all pertinent financial documents. This serves as a checklist, record, and organizational tool for important accounts, contacts, account numbers, and policies. Beneficiaries are reviewed for relevant accounts.

Activity #2 - Complete an Integrated Business Balance Sheet & Personal Net Worth Statement.Objective - Combine personal and business assets/liabilities so that personal and business asset allocation can be examined separately or together.

Activity #3 - Complete the “Ideal” and “Current” Asset Allocation ReviewObjective - Review alternative asset classes in a portfolio approach framework. Compare desired asset allocation strategy with current asset allocation strategy to identify possible areas to expand investments to become more diversified.

Ideal Allocation Current Allocation

Activity #4 - Complete the Estimated Expenses & Emergency Cash Reserves WorksheetObjective - Estimate monthly family expenditures and identify the appropriate emergency cash reserves to be retained in readily available savings accounts.

Activity #5 - Evaluate “on-line” and “brick and mortar” money market, certificate of deposit, savings, and checking account options.Objective -Identify the most appropriate source for providing these services. Identify higher-interest earning accounts and institutions compared to existing providers.

Activity #6 - Obtain a free credit report detailing personal credit history and credit accounts.Objective - Examine credit history, open lines of credit, available credit limits, and current balances related to personal financial accounts. Check for errors and inspect all current liabilities.

Activity #7 - Obtain UCC (Uniform Commercial Code) Lending RecordsObjective - Search UCC Records to determine if personal or business property has been pledged or is encumbered. Use UCC records to discover the availability of assets for attachment or seizure and the financial relationship between entities.

Activity #8 - Objectively Evaluate Insurance Needs (life, health, disability, etc.)Objective - Assess insurance needs. The emphasis here is to determine your needs and then practice consumerism to find the best provider and cost combination.

Activity #9 - Complete the Investment Risk Tolerance Quiz (for each financial decision maker in the family/operation).Objective -Assess risk tolerance for those instrumental in the financial responsibilities of the family and business.

Activity #10 - Evaluate local brokerage and “on-line” discount brokerage options.Objective -Evaluate the alternative brokerage options to facilitate investments in bonds, stocks, exchange traded funds, and other investment assets “off the farm.”

Activity #11 - Complete the Retirement Estimator for Farm FamiliesObjective - Estimate the income needs and potential sources of funds for a comfortable retirement.

Activity #12 - Evaluate alternative Individual Retirement Account (IRA) types for individuals and alternative retirement plans for businesses.Objective - Compare retirement program type details to ensure that participants are utilizing the most appropriate plans for their individual and business circumstances.

Activity #13 - Complete the Estate Planning Questionnaire and Farm Asset/Management Transfer PlanObjective - Assess the current value of the estate, titling of assets, and communicate farm asset management plans.

Activity #14 - Evaluate Potential Financial Advisors using the Financial Advisor QuestionnaireObjective - Evaluate the credentials, services, and compensation basis for potential financial advisors. This activity will help you make informed decisions about engaging a potential financial advisor based on the information they provide.

What are we evaluating

• Effectiveness of the online curriculum for its users

• Overall design of the online program (simplicity)

• Activities contained within online program• Content of the program relevant to the topic• Navigation and instructions of the online

program• Logistical and performance items of the

online program

How will we evaluate

ParticipantsEmailed aninvitation tocomplete a 25question survey

FacilitatorsFollow up phoneinterview

March-May 2009