Financial literacy is a must-have to contribute to a strong and stable economy, but people need to be realistic and realize this kind of knowledge can’t be attained in just a few years, said Canada’s first Financial Literacy Leader.Jane Rooney, who was appointed in the spring as leader by the Financial Consumer Agency of Canada, told a panel at the Investment Funds Institute of Canada’s (IFIC’s) annual conference, that financial literacy means instilling confidence in Canadians so they can make informed financial decisions – a process that will take years.
“They need the tools to understand the product, the risks, the cost and the protection behind the product, so they can make a decision if that’s the investment product they want to use.”
Currently, Rooney’s strategy is being developed in three stages: first with seniors, then low-income, aboriginals and newcomers and finally a program that will target children, youth and adults.
Each group will learn financial literacy through tools that will deal with specific life events – such as when a family has a child and needs to get information on registered education savings plans.
“Different savings vehicles will have different ‘nudging techniques,’” she said.
Tom Hamza, president of the Investor Education Fund, which was founded by the Ontario Securities Commission, said sometimes too much information can be confusing to Canadians as well.
He also said that countries like the U.K. and Australia are ahead of Canada when it comes to financial literacy, mainly because greater oversight on regulations have been put in place there.
But Rooney said disclosure of costs and other information is not enough, stating that financial literacy and regulations are complementary.
Giles Marshall, vice president, portfolio manager with Fiduciary Trust Canada, said the investment policy statement is the cornerstone of the investor-advisor relationship, helping people stay on track despite rollercoaster markets and enabling them to avoid knee-jerk responses.
Marshall said setting expectations can be achieved immediately – changing attitudes, however, will take more time.