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PODCAST

2021 Ketchum Prize: Expanding Financial Capability in Native Communities

October 05, 2021

Native communities face unique challenges and opportunities when it comes to their personal finances. Helping them navigate the sometimes-confusing world of finance is Shawn Spruce, the recipient of the 2021 Ketchum Prize.

Every year, the FINRA Investor Education Foundation awards the Ketchum Prize, the FINRA Foundation’s highest honor, to recognize outstanding service and research to advance investor protection and financial capability in the United States.

On this episode, we talk to Shawn Spruce about his advocacy and outreach, the financial challenges facing Native communities, and what leaves him feeling optimistic about the future.

Resources mentioned in this episode:

First Nations Development Institute: Building Native Communities

Ask Dr. Per Cap Blog

Listen and subscribe to our podcast on Apple Podcasts, Spotify or wherever you listen to your podcasts. Below is a transcript of the episode. Transcripts are generated using a combination of speech recognition software and human editors and may contain errors. Please check the corresponding audio before quoting in print. 

FULL TRANSCRIPT 

00:00 – 00:24

Angelita Williams: Every year, the FINRA Investor Education Foundation awards the Ketchum Prize to recognize outstanding service and research to advance investor protection and financial capability in the United States. On this episode, we are joined by the 2021 recipient of the Ketchum Prize to hear about his work empowering Native American communities to make more informed financial and investment decisions.

00:24 – 00:34

Intro Music

00:34 – 00:47

Angelita Williams: Welcome to FINRA Unscripted. I'm your guest host, Angelita Williams from FINRA's Corporate Communications Department, here with Shawn Spruce, the recipient of the 2021 Ketchum Prize. Shawn, congratulations and welcome to the show.

00:48 – 00:50

Shawn Spruce: Thank you so much, Angelita. I'm really excited to be here.

00:51 - 01:01

Angelita Williams: John, you are a financial education consultant at First Nations Development Institute, teaching Native American communities to handle their finances. Can you tell me about what led you to this work and why it's so important?

01:02 - 03:35

Shawn Spruce: When I was in high school, it was my freshman year. I had an English teacher and he said something that has really stuck with me. And what he told us is that a person has three primary goals in life. Number one, you need to find out what it is you are good at. What is your calling? Number two, you then need to master that skill or calling. And then the third and final step is to share that calling with the world.

OK, so I'm 53 years old and I've been doing this for about 13 years. So if you do the math here, I didn't get started in this career until I was already 40 years old. I was already well into middle age. So, I spent a lot of my 20s and 30s doing other kinds of things, and I will tell you that that first step, finding out what you are good at, what is your calling, that took me a really long time to figure out. I wasn't a standout student and I came out of high school like a lot of people, just not really sure which way to turn, struggling with that transition into adulthood. At one point I went to a trade school. I really wanted to be an automotive service technician. That was really my dream. I went to trade school, but unfortunately, I just wasn't very good, and I really struggled. I worked in the restaurant industry for a number of years and mixed success, and I had fun and I was happy doing things like that.

But I just never really felt like I really had a calling that I was really good at what I was doing, and during that time, I gained a lot of life experience. I know what it's like to be behind on bills. I know what it's like to have student loans. I know what it's like to get a little carried away with a credit card. And I think that makes me very relatable in the communities that I work in, I think it makes me relatable to people, and that I've been there. I gained so much life experience and was able to just look at the world from so many different perspectives. I think it has just made me so much better at what I do now.

And it wasn't an easy road to get here, but I think that just all adds to the value of what I do and what I'm able to offer. And again, it's finding out what you're good at, sharing that gift after you've mastered it. And it's always stuck with me what that teacher told me years ago. And I've really tried to live my life with that spirit in mind.

03:36 - 03:52

Angelita Williams: It sounds like you've had a very interesting personal journey into this space. And so, I'm really curious about what are some of the unique challenges and opportunities that are facing Native American communities when it comes to financial capability and literacy? What makes that so different, maybe from other communities?

03:53 - 05:28

Shawn Spruce: Well, one thing that we're seeing in recent years is there's a whole wave of new money coming into Indian Country. And you can trace it back 15, 20 years ago, when some of the economic development initiatives in some of these tribes started really taking off with gaming and other efforts have created a lot of financial success in many communities.

You can look at some of that settlements and court-ordered judgments in recent years, such as the Cobell settlement, which is a multi-billion-dollar class action lawsuit brought against the federal government for mismanagement of Indian trust moneys. And that pumped a lot of money into a lot of tribal economies and a lot of direct payments went out to Native American individuals.

You've also just had a lot of Native folks who've made really good career choices and have good incomes. So, because of that, we're now seeing more than ever a need for Native folks with increasingly complex financial lives, a need to invest, the need to understand insurance. They need to understand how to use good credit. And unfortunately, that newfound wealth has also drawn some negative aspects as well, and Native Americans are increasingly targeted by fraud and other forms of financial exploitation. And again, it's just because there's money coming into these communities and communities that were once rural and remote can now be accessed via technology, smartphones, internet.

 So, we're being targeted more than ever before. But at the same time, there's just a lot of opportunities and a lot of really good positive developments as a result of recent financial success in many Native communities.

05:29 - 05:49

Angelita Williams: So, I think that's great information for our listeners to have. I think what I am also interested in learning about is what are some of the unique challenges? As you mentioned, there's new technologies and more access, but are there specifically challenges that Native communities have when it comes to ATMs or loans or even retirement savings vehicles?

05:50 - 06:55

Shawn Spruce: Absolutely, yes. And what's interesting is you look at Native American communities and we have some very unique situations with regard to living on land held in trust. So oftentimes a Native American person, their income could be subject to a very different taxation method than a non-Native American person who doesn't live on a trust land piece of property or on a reservation. It can create a lot of complexities with regard to, for instance, being a homeowner, with regard to how the mortgage application and approval process works. Also, just how tribal sovereignty can impact our financial lives in terms of entering into contracts or applying for loans. Some of those issues can be very different for a Native person. So those present some very unique challenges and opportunities to address personal finance from a very unique perspective.

06:56 - 07:05

Angelita Williams: In terms of your work with Native communities across the country overall, what is it that you really hope to achieve? What are your main goals?

07:06 - 09:13

Shawn Spruce: Well, I really seek to impact as many lives as possible. I'm very much a grassroots financial educator. I write curriculum. I write a weekly personal finance column. I do some of that broader outreach. But at the heart of what I do is really working at the community level, doing presentations, doing workshops directly in the community or now via Zoom or video conference or whatever medium that I can use to effectively engage with folks out there at the community level. But I really enjoy that aspect of being very much at that ground level and working directly with individuals and families, and I want as many people as possible to have access to this information.

And I think everybody has a right to know what a good credit score looks like and what a bad credit score looks like. I think everybody has a right to know what is a good loan and what's not a good loan. What is a realistic fee to pay a financial advisor and what's not a good fee. But ultimately, that first step is just to make sure as many people as possible have that information, and unfortunately, too few people do have that information. I think personal finance has gotten more confusing as time has gone on. I think if you look at even just a typical bank account, all the different fees and different penalties are associated with that.

And there's a lot of finger pointing going on in terms of how many Americans are in debt and we're not saving enough money. There's personal accountability involved in that. But I also think just managing money is much more complicated than it was for previous generations.

And now you have this whole new layer of financial technology, which provides great opportunities. I can deposit money using a smartphone, I can make purchases, I can invest, and I can do all these great things. But I can be susceptible to fraud, to making rash decisions and things of that nature. So, there's a whole higher level of accountability and responsibility and education ultimately that is associated with some of this fintech that's on the market now. So again, my goal is to just make sure people have that information.

09:13 - 09:26

Angelita Williams: Shawn, it sounds like you have a pretty busy agenda, a pretty busy schedule. Can you tell me what a typical day at work looks like for you? Or are you traveling all over the country? Are you seeing young people, adults? What does your typical day look like?

09:27 - 10:54

Shawn Spruce: Well, I think I would probably separate my life into pre-COVID and present COVID, and I would say pre-COVID I was traveling a lot. I was visiting a lot of communities; I probably travel at least two weeks out of every month. And I have had the privilege of visiting and working in Native communities from coast to coast along the East Coast, all through the Midwest, the Southwest, the Northern Plains, Rocky Mountain regions, Pacific Northwest, California. Been to Alaska, been to some of the remote villages there. So, I've just really had a wonderful opportunity to visit a large, large swath of Indian Country and Native communities.

That was pre-COVID. And now that we're in COVID, I've really had to pivot dramatically, and all of my outreach is primarily now video conference. So, I'm doing a lot of training. I really haven't let up at all in terms of the outreach that I'm doing. I'm still training as much, still doing as many presentations and as many workshops as before. It's just that they're all virtual. I also do some Train the Trainer workshops, which are more of a capacity building model. We've got a couple of different curriculum that I use to teach financial education, and with the Train the Trainers, we're able to actually train other people to deliver that same curriculum and scale our programs and scale our impact. So those are three-day trainings. I'm doing those all via Zoom as well. And then every week I publish a personal finance column called Ask Doctor Per Cap. So that keeps me busy. That's a pretty good snapshot of a typical day.

10:55 - 11:11

Angelita Williams: That's a pretty exhausting day. I think given all that you do, the Train the Trainer program, the workshops and other trainings and presentations. Out of all of those things, what are some of the programs or trainings that you think have been particularly successful in terms of your outreach?

11:12 - 13:11

Shawn Spruce: Well, I work very closely with the Bureau of Trust Funds Administration and that is a Native American agency inside the Department of Interior. And what BTFA is essentially is like a large accounting operation. They manage billions of dollars’ worth of trust moneys on behalf of both Native American individuals and tribal governments. Those are their beneficiaries. Specifically, these accounts are generated when a Native American person generates some kind of income from assets that are held in trust. It could be a lease on trust land that they receive income for or granting a right of way.

So aside from just handling all these accounts, managing those, getting statements out, facilitating transactions. They also see a huge need to provide financial education to all of these beneficiaries. So, I've been really fortunate to be a strong partner with BTFA over the last dozen years. And I do a lot of outreach in partnership with Bureau of Trust Funds Administration, and it's been really impactful because many times these are folks that have just received maybe a lump sum from a settlement. And it's wonderful because we have a lot of really strong teachable moments because these folks are actually managing money. And again, anytime a Native American person has income from a trust source, it has a very unique, sometimes complex methodology in terms of how that money needs to be managed, how it's taxed, how it needs to be accounted for.

So, I've just done many, many workshops at the community level with beneficiaries, with landowners and various other folks in Indian Country. I find those have been some of the most impactful because we've got large, large groups of people. And as I mentioned earlier, Native American people can be prone to be targets for fraud. So we've been able to introduce this whole fraud awareness element into those trainings as well, which I think have been really, really beneficial.

13:12 - 13:31

Angelita Williams: What I think is so inspiring and amazing about your work is just the breadth and scope of what you do, something you talked to us earlier about was some work that you did in Gallup, New Mexico, that I think is really phenomenal. Can you talk about your work with taking on tax preparation firms that were preying on unsuspecting customers?

13:32 - 17:53

Shawn Spruce: I will. Yeah, there was a really, really interesting project that I worked very closely on about 10 years ago. And in partnership with First Nations Development Institute, we got a grant to go out and study some of these paid tax preparers that were operating around the Navajo Nation in western New Mexico and the Four Corners area. And what we did is a series of mystery tax shopping visits where I would accompany a taxpayer and we'd go into one of these tax prep businesses that charge a fee and I would pose as a relative or a friend, and we'd just go ahead and have this person do their taxes and we pay all the fees.

And many of these businesses were also offering these refund anticipation loans, which are loans based on the impending refund that the taxpayer was set to receive after their tax return was accepted and processed by the Internal Revenue Service. And many of these refund anticipation loans actually start during the holiday season, and they'll have taxpayers come into these businesses around Thanksgiving time right around Black Friday. And unfortunately, we just uncovered some really, really bad practices.

Some of these businesses were taking people's birth certificates and Social Security cards and holding them until the tax refunds were actually facilitated, which could be months. And one of the worst that we've discovered was one business in Gallup, New Mexico, that was withholding refunds. They actually had already received their refund for these taxpayers, and they were withholding them unbeknownst to the taxpayer and encouraging them to take out additional refund anticipation loans that were generating even more fees and more interest. And these were completely not needed.

 So, I got a sneaking suspicion that that was not a coincidence. I thought this just seems like something that could potentially be a real scam. These people could be doing this to hundreds or thousands of taxpayers and generating a lot of extra income in the forms of these unnecessary interest rates and these fees.

So, I filed a complaint with New Mexico Attorney General, and they looked into it and they said, well, you know, we're not really sure. Well, I was going to different conferences and sharing the results of the study. And eventually, I was able to connect with some folks from the Consumer Financial Protection Bureau and they took a really big interest. They said, you know what, send us which you have sent us all the data, all of the different records you have from these visits. They went ahead and got some attorneys involved and started really looking closely. And ultimately, this led to a large class action lawsuit in partnership with the Navajo Nation that ultimately shut this one business down and resulted in over $400,000 of civil penalties and redress.

So, it wasn't an isolated incident. They determined that they had duped over 1,500 taxpayers in that area using this scam of just not telling them that they already received their refund. So, I just was really proud of being able to work on that project and recognizing that something was not right.

And again, some of the taxpayers, of course, they were right in there with me. There was a woman by the name of Cheryl Linda Bennett, and she's a Navajo woman. She lives in Albuquerque, single mother, three kids, and she was the prime taxpayer that was going back and forth with me to these trips, to and from Gallup to get all this data and to go round and round with this paid tax prep business. So, a lot of props to folks like her were willing to go out there and have their taxes filed and were willing to share that information.

But it turned into a historic class action lawsuit. It was the first time Navajo Nation ever partnered with the Consumer Financial Protection Bureau, and ultimately, we were able to shut down a really bad actor that was exploiting a lot of Native American taxpayers. And sometimes people ask me, well, you teach these workshops, you teach people how to invest and what impact is it really making? And sometimes it's hard to get that data. But when you can work on a project that can lead to nearly a $500,000 class action lawsuit settlement, that's real money and it's something I'm really, really proud to have been a part of.

17:54 - 18:28

Angelita Williams: And it's a tremendous win and certainly one in which, as you said, is very impactful for consumers and particularly for individuals who might already be facing some financial challenges. I think one of the other things that makes you such a wonderful recipient is your ability to look ahead and to really be able to forecast trends. Can you talk about some of the current trends that you're focused on and specifically you'd mentioned technology earlier? What kinds of opportunities and challenges might be related to financial technology in Indian Country?

18:30 - 21:38

Shawn Spruce: Historically, many Native communities have lacked access to financial services. Few banks, few places where you can get an affordable loan, home mortgage, car loan, personal loan, and that's changing. We're seeing more and more nonprofit lenders, community development financial institutions. We're seeing tribal credit unions. We're seeing a real shift with regard to an increase in financial services and products that are available to Native American people.

And of course, now with technology, there are even bigger opportunities for some of these tribally focused lenders to scale their work and also reach more remote parts of Indian Country. Unfortunately, not all parts of Indian Country have adequate access to broadband and internet. So even though there's some of this great technology out there, there is no guarantee that every tribal community is going to benefit from it equally. So, there is a huge challenge there in terms of just building up that information technology IT infrastructure so that Native communities can take advantage of a lot of this great technology that's out there.

We're increasingly seeing challenges with tribes that have financial success and are able to share that success with tribal members in the form of per capita payments. So, you hear a lot about this with tribes that operate and manage casinos, and some of these tribes are able to take a portion of those gaming profits and pay those directly to tribal members in the form of a per capita payment. And in some communities, those payments were a huge windfall, they were a blessing in that tribal members had this whole new source of income. But it also has created challenges with regard to families and individuals and even whole communities just not really prepared for managing these lump sums.

And especially for tribes that choose to take the per capita that's designated for young tribal members minors under 18 years of age. Those moneys are placed into a minor's trust. And then when that teen reaches legal age, that tribal member comes into a pretty significant windfall payment from all that trust money that has been accruing in that trust from the time they were born until they turn 18. So, I've been fortunate enough to do a lot of workshops and a lot of training and a lot of outreach with regard to preparing young people and their families and their communities with the responsibility of managing that money.

But it's one of those things, it's one of those good problems to have. It's a lot of money coming into a community. It could be a lot of money coming into a young person's account, but it also creates challenges, especially for folks that just historically have not been in a situation where they have access to a significant amount of money like that. So, it continues to be a problem.

21:39 - 21:58

Angelita Williams: I think that's a really interesting problem to have. As you said, the juxtaposition of the windfall of those additional monies with the challenges of having the ability to manage those additional funds responsibly. Are there things like that that keep you up at night? Do you have things that you worry about related to the areas of work that you do?

21:59 - 23:19

Shawn Spruce: Yeah, I do. If you look at some of these tribal economies, they've really only started firing up within about the last 25 years, and there's just been a lot of growing pains, but also even tribal governments as well in terms of managing money. Another part of my work is to actually do workshops and trainings, not just with individuals, but also with tribal councils, with investment committees. Again, teaching them the basics of investing, teaching them what are red flags for investment fraud and things of that nature.

So really fortunate to be able to do that work on more of an institutional level as well. And I'm a member of the Laguna Pueblo in New Mexico, and I served in our tribal investment committee for about three years. So, I have a pretty good background on what it's like managing or overseeing or being responsible for institutional moneys like that. And it gives me a really unique perspective when I'm actually able to go out and share some of that information with other tribal communities.

But again, I think that many tribes and individuals are certainly in the position where they can be victimized by either an unscrupulous financial advisor or just somebody who's really looking to commit fraud. Unfortunately, we've seen cases like that as well. So those are things that really worry me because I think it's going to take time.

23:20 - 23:31

Angelita Williams: Given all of your years of advocacy work and the wins that you've had, as well as some of the challenges that still exist, what leaves you with the most hope for the future?

23:32 - 25:25

Shawn Spruce: Well, Indian Country is extremely resilient, and we're really making a lot of strides with regards to self-determination and taking charge of our financial lives. And there are so many great opportunities in so many tribal communities, and we're seeing more and more people that are joining the mainstream in terms of being able to invest and becoming homeowners. And I think that Native people are just becoming more and more savvy and more and more knowledgeable with regards to how they manage their lives and how they plan for the future. 

I think for a long time in many tribal communities, there has been hesitancy or even a lack of willingness to plan for the future. And I really see that changing so much in recent years. People are just taking that initiative.

I'll tell you, when I first started doing this work back in 2008, I know this sounds cliché, but it really was a dream come true. I'm as passionate about this work as ever. I'm as passionate and as close to the topics as ever, and that's just a wonderful feeling. Even though, as sure as any job is, you do it longer, you're definitely going to have good days and bad days. But at the end of the day, I really, really do just love this work and I love what it means and what it stands for.

25:01 - 25:26

Angelita Williams: Well, Shawn, thanks for joining us today and congratulations again on receiving the 2021 Ketchum Prize. That's it for this episode of FINRA Unscripted. If you don't already, listeners can subscribe to FINRA Unscripted wherever you listen to podcasts. If you have an idea for a future episode, you can email us at [email protected] Until next time.

25:26 – 25:31

Outro Music

25:31 - 25:54

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