Reaction to the final report by the Task Force on Financial Literacy has been overwhelmingly favourable, with several industry groups volunteering to provide education and assistance.
The federal government was also quick to welcome the report, entitled Canadians and Their Money: Building a brighter financial future. (Click here to download a PDF of the report)
“Improving financial literacy helps consumers make knowledgeable and confident decisions towards achieving their financial goals,” said Finance Minister Jim Flaherty. “I am very pleased today, on behalf of the Harper Government, to thank the Task Force members for their dedicated efforts in concluding this challenging task.”
The Investment Funds Institute of Canada chimed in, expressing gratitude that several of the recommendations made in its submission had been adopted, including the engagement of all provinces, educating Canadians on the role of financial advisors and the creation of a national clearinghouse for information.
“In their report they have provided an excellent blueprint for strategies and initiatives to improve the overall level of financial literacy of Canadians of all ages,” said Joanne De Laurentiis, president and CEO of IFIC. “We heartily endorse the report’s finding that building financial literacy must be an ongoing and shared activity.”
Cary List, president and CEO of the Financial Planning Standards Council said he was “very pleasantly surprised” by the report.
“I knew a lot of work went into this, but I wasn’t prepared for the really creative and bold set of recommendations that came out of this,” he said. “This is potentially a watershed moment for the future wellbeing of Canadians, if the recommendations are fully adopted and implemented.”
Most exciting for List is the focus on not only informing Canadians, but changing financial behaviour. The addition of financial literacy to the federal government’s Essential Skills framework and the focus on educating youth also impress List.
He says the FPSC looks forward to participating in the advisory council.
Advocis has said it will “do everything in its power” to execute the task force’s recommendations. The organization is particularly pleased with the focus on life-long learning and the notion of shared responsibility for providing education.
“Financial advisors and planners help their clients make fully informed financial and investment decisions,” said Advocis board chair Robert McCullagh. “An important part of an advisor’s job is to help educate and in the process elevate their clients’ level of financial literacy. The recommendations of The Task Force take what we already do to the next level. We’re delighted.”
Not everyone is “delighted” however.
Tom Hamza, president of the Investor Education Fund (IEF) expressed concern over the makeup to the proposed financial literacy advisory council, which would include representatives of the financial industry.
“We need a structure in place that puts consumer interests before industry interests,” he said. “If financial institutions are going to sit at the financial literacy table, they need to wear a different hat. Ultimately, they answer to their shareholders so it’s in their DNA to focus on selling products to consumers rather than educating them. We need to help consumers make better decisions by providing context that isn’t always provided by the financial services industry.”
The IEF called the report “a good first step” in improving financial literacy, but warned that changing people’s financial behaviour will be an uphill battle.
“Hundreds of millions of dollars are spent marketing financial products to Canadians and very little in educating them about making good choices,” says IEF president Tom Hamza. “It will be a difficult task to educate consumers and to help them get the skills that are needed to make better financial decisions and withstand the temptations to which they’re exposed.”
The IEF applauded the task force’s recommendation for a central website to disseminate information, but pointed out that there are no “one size fits all” solutions. The information on the website would need to be tailored to the user’s own situation, taking into account factors such as age, for example.
“Every Canadian faces financial decisions each day. Some are small, others are critical,” said Donald A. Stewart, chair of the task force. “For most Canadians, making the right decisions, or putting them off entirely, can have a major impact on our financial well-being, and even our health and happiness. That’s what this initiative by the Task Force on Financial Literacy is all about—encouraging Canadians to take action and helping them make the right financial decisions.”