Less than two-thirds of Canadians are confident about their financial knowledge, according to Statistics Canada’s Canadian Financial Capability Survey.
And that figure hasn’t changed since 2009, when it was about 60%, said Financial Literacy Leader Jane Rooney at an Economic Club event on December 10. She added the preliminary results of this year’s survey show savings rates are low in Canada.
And, many Canadians don’t understand the term “financial literacy,” which she defines as having the knowledge, skills and confidence to make financial decisions.
On the upside, the recent Statistics Canada survey shows more new Canadians are aware of, and are using, vehicles such as TFSAs, and more parents across all income brackets are saving for their kids’ educations.
Still, there’s a lot of work to be done, says Rooney, since we still don’t fully understand people’s attitudes toward money and, specifically, across different priority groups. This includes seniors, low-income Canadians, new Canadians and youth.
To help, she and the Financial Consumer Agency of Canada have set up the Canadian Financial Literacy Database. Through this hub, professionals and investors can access more than 800 resources, and take a quiz to assess their money management skills.
Looking at how these resources are used and at the quiz results is one way Rooney and her committee plan to identify knowledge gaps and needs. She’ll also continue to meet with industry groups and communities across the country—recently, she connected with low-income, and Aboriginal Canadians.
Check out live tweets from Rooney’s speech below*. Also, assistant editor Katie Keir had a one-on-one chat with Rooney. Here’s the Q&A.
Insights from Jane Rooney
Q: The four priority groups you’ve identified are seniors (and near-seniors), low-income Canadians, new Canadians and youth. Why have seniors been the primary focus so far?
A: Helping seniors was identified as a federal priority in budget 2013, so when I was first named Financial Literacy Leader, I went through consultations with industry groups that work with seniors. I found:
- demographics are shifting in Canada and across the globe;
- there have been changes to government benefits (CPP, OAS), so people will have more complex decisions to make; and
- seniors have a growing level of debt, and higher bankruptcy levels, as identified through the Office of the Superintendent of Bankruptcy Canada.
When we mention near-seniors, we’re referencing those who are aged 55 and above. But it’s important that people start planning even earlier than that, and they understand savings vehicles.
Q: Youth education will be more of a focus in 2015, so what initiatives might we see at that point, and what’s being done currently?
A: Our consultation paper on youth education is live now, and we’re meeting with industry groups. Currently, we’re looking for comment on how to best connect with young Canadians, both young adults and youth. Comment letters are due by December 31, 2014.
Education and school curriculums are in the jurisdictions of the provinces and territories, but we’ve been working to raise awareness of why financial literacy matters.
Further, FCAC already developed a financial education program intended for schools in 2004. We partnered with the BCSC, which developed the financial literacy component of a required high school course called Planning 10 for B.C. We took that program and developed a resource called The City, and it’s marketed to teachers.
Also, financial literacy is part of the national curriculum: starting in 2012, there were requirements in Ontario for literacy to be part of the curriculum from grades four to 12. A cross-curricular approach has been adopted, however, so there isn’t a specific financial planning course as is seen in B.C. In Alberta, there are career and life management courses, and financially literacy is embedded in the New Brunswick and Quebec curriculums, with Quebec on the verge of launching a new curriculum.
Q: What can advisors do to help educate Canadians?
A: Advisors have a critical role in boosting financial literacy because they’re working with individuals, and can provide life-long learning. They go through someone’s plan over several decades and, as life events occur, can educate clients.
Advisors are a critical part of my audience, and I get access to them through both FPSC and Advocis, both of which I work with closely. The investment community has been very engaged, especially due to new rules coming down through CRM. If clients are worried or upset, it offers a great opportunity to explain their value and find out about people’s knowledge gaps. Right now, advisors should be sharing best practices of how they’re meeting communication requirements.
Live tweets from Economic Club event (* Return to rest of article)
Many people complain about the lack of financial literacy in Canada, and now we have someone who will do something about that, says @ECofCanada
Financial literacy has an impact on the strength of the overall economy, says Rooney @ECofCanada
Rooney and FCAC have 2 mandates: investor protection and improving financial literacy @ECofCanada
On top of saving and investing trends, we need to figure out people’s attitudes toward money, says Rooney @ECofCanada
Based on Rooney’s work, the Canadian Bankers Association is training front-line staff on how to warn people about fraud @ECofCanada
If we teach kids about finances, their parents will also learn as they help with homework, adds Rooney @ECofCanada
Throughout Financial Literacy Month, there were more than 1,200 events, and more involvement from the financial industry @ECofCanada
My biggest challenge is completing initiatives quickly, says Rooney. She tells her kids, “I try to help ppl learn to manage money” @ECofCanada
In OECD group, 107 countries are represented, says Rooney. And Canada, the U.K., Australia are among the top leaders with regards to financial literacy @ECofCanada
Not much work is yet being done for small businesses, but one national group has a literacy task force addressing that need, says Rooney @ECofCanada
You especially need to help low-income and new Canadians understand what “financial literacy” means, she adds @ECofCanada