Good article in the Globe on Saturday critiquing the much hyped “Count me in, Canada” National Strategy for Financial Literacy unveiled by Canada’s federal government last week. See: To bridge the knowledge gap, financial literacy is a two-way street.
Financial literacy is a nice-sounding concept.
But literacy requires two sides talking the same language, with clarity and full disclosure.
That isn’t always the case in the financial services industry.
Too many consumers come to the table with unrealistic expectations, and inadequate or faulty knowledge.
And financial industry players often exploit that knowledge gap by being vague about what they’re selling, and more importantly, how they’re paid.
The Ministry of Finance’s self-declared “ambitious plan that will empower Canadians to meet their financial challenges head on” has been watered down to 13 pages of white spaces and feel good pictures, devoid of the substance needed to transform the garbage-in-garbage-out sales platitudes so commonly offered as financial planning and advice today. The final product of years of discussion, has ended up little more than a template with the financial sector’s self-serving fingerprints all over it.
The goal, Ottawa says, is to help Canadians manage money and debt wisely, save for the future and prevent fraud and abuse. But it offers scant details of how to achieve these lofty goals. The strategy talks a lot about education, but barely a word about regulation.
That’s too bad. For years now, securities regulators have been pushing for clearer rules in two key areas – reforming mutual fund fees and mandating a “best interest” duty between financial advisers and their retail clients.
Both efforts have been vigorously resisted by the financial services industry, which insists new regulation is unnecessary.
As in America, the finance sector continues to block the fundamental reforms needed that would exact a fiduciary standard of all people working in the financial advice business. Until this happens, individuals will continue to be sold financial risk every day in every way, contrary to their best interests. And our society will continue to pay the heavy cost of an aging population moving into their twilight years indebted and brutally under-capitalized.
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