In response to the Task Force on Financial Literacy‘s recent report to the Federal Minister of Finance, Larry MacDonald wrote a piece called ” How to really cure financial illiteracy“. I agree with Larry’s view that financial illiteracy wouldn’t be as big a problem if financial advisors hadfiduciary standards that superseded the current (and irresponsible) emphasis on “generating sales and building book”.
As a result of appropriate government regulations, Canadian financial institutions weathered the recession well. Now would be a good time for the financial service sector in Canada to voluntarily take action to improve financial literacy – an issue that puts many low income Canadians at risk.
Here are three ideas for financial institutions that would address what the Task Force on Financial Literacy learned in its research:
- Our financial institutions should collaborate to develop a mandatory school-based program to help young people make informed judgments and better decisions regarding the use and management of money. The program should provided in appropriate grades for students in elementary school, junior high school, and secondary school.
- A better orientation to financial literacy should be provided by our financial institutions to all young people opening a bank account for the first time. This could be done in engaging and entertaining age-appropriate ways including learning sessions in branches and better web-based programs. (Recently, I saw the gap in this area when I went with my eleven-year-old daughter to open her first bank account – the experience was unremarkable to say the least.)
- Financial institutions have already recognized the need (and the opportunity) to provide information and services to people who are new to Canada. Low income families who may not have been considered as “target markets” should also be a priority.
Click here to read Canadians and Their Money: Building a brighter financial future.