TASK FORCE UNVEILS NATIONAL STRATEGY TO STRENGTHEN FINANCIAL LITERACY IN CANADA

Proposed strategy features five priority areas


Canada’s Task Force on Financial Literacy is calling for the implementation of a national strategy to strengthen financial literacy in this country, and recommends efforts to educate Canadians on the benefits of getting professional financial advice.


The task force, which conducted consultations across the country last year, unveiled its report of recommendations to the Minister of Finance on Wednesday, calling for urgent action on financial literacy.


“Financial literacy is critical to the prosperity of Canadians and the nation,” said task force chairman Donald Stewart. “Increasing the knowledge, skills and confidence of Canadians to make responsible financial decisions will help them meet their personal goals, enhance their quality of life and make Canada more competitive.”


The proposed national strategy builds on financial literacy work already underway by many groups and individuals. It would be a collaborative effort between individuals, all levels of government, financial institutions and voluntary organizations


The strategy features five priority areas: shared responsibility, leadership and collaboration, lifelong learning, delivery and promotion and accountability. The strategy would incorporate formal education, federal government programs, online tools and a campaign to raise awareness. Ongoing evaluation of the strategy by an appointed individual would ensure accountability, according to the task force.


“Achieving real progress will require concerted and cooperative efforts among all stakeholders: from individual Canadians to governments at all levels, from a small non-profit helping new Canadians flourish to financial services providers and businesses throughout the economy,” said task force vice chairman Jacques Menard.


Under the plan, the formal education system would provide a foundation for financial literacy, but education would also extend beyond the classroom into workplaces, the financial services marketplace and online, with the creation of a single-source website providing unbiased information.


The report calls on financial services providers to continue to make important contributions to financial literacy in Canada.


“Financial services providers have the reach, expertise and established relationships necessary to deliver financial education to a large segment of the population,” the report says. “The Task Force recommends that financial services providers put a strong emphasis on delivering educational information and ensuring that it is fully understood by Canadians at ‘teachable moments’ so that Canadians can make responsible financial decisions.”


The task force acknowledges that many Canadians heavily rely on financial advisors for financial information, and calls for the government to make a concerted effort to build consumer awareness around financial advice as a tool to assist in financial planning and decision-making.


“As financial products become more complex and people assume greater responsibility for their retirement savings, we agree that more can be done to better inform Canadians about the use of professional advice to improve their current and future financial circumstances,” the report says. “Retirement planning and estate planning are examples of activities where consumers can benefit from the assistance of a professional financial practitioner.”


The task force suggests that Canadians should be informed on the pros and cons of professional advice, the role and obligations of advisors, the top questions one should ask when choosing a financial services provider, and the various professional financial designations and accreditations.


The report adds that professional financial advice should meet rigorous standards, especially with respect to remuneration transparency and professional qualifications.


Industry welcomes report


Advocis, the Financial Advisors Association of Canada, said it fully supports all of the task force’s recommendations, including the aspects that are directly relevant to financial advisors and planners.


“Financial advisors and planners help their clients make fully informed financial and investment decisions,” said Advocis board chairman 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.”


The Investment Funds Institute of Canada also welcomed the report.


“IFIC commends the work done by Don Stewart and the members of the Task Force,” said Joanne De Laurentiis, president and CEO of IFIC. “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.”


Financial Planning Standards Council (FPSC) called on all stakeholders to act on the report’s recommendations, for the future well-being of Canadians.


"This comprehensive report encompasses a number of important recommendations that will move Canada in the right direction towards advancing financial literacy skills," said Cary List, president and CEO, FPSC.


The Investment Industry Association of Canada also commended the Task Force for recognizing the value of professional financial advice to assist Canadians in their financial decisions.


“We strongly agree with the Task Force recommendation that the federal government should build consumer awareness of the importance of working with a registered financial professional. Greater financial literacy includes knowing how to seek a qualified professional and fully derive the benefits of financial advice.” said Ian Russell, president and CEO, IIAC.


Megan Harman

Investment Executive
February 9, 2011