Thursday, June 2, 2011

International Financial Literacy Conference Big 5 Themes

Ursula Menke's Welcome Address
Last week at the Westin Harbour Castle in Toronto, 400 delegates from around the world came together to talk about financial literacy on a big scale. I was fortunate to be able to scoop a media pass for this major event which was cosponsored by the Organization for Economic Co-operation and Development (OECD) and the Financial Consumer Agency of Canada (FCAC).

Over the two days I attended every keynote, plenary and workshop that I possibly could.I interviewed celebrities such as personal finance author Alison Griffiths (who hosted the conference) and neuroscience author Jonah Lehrer. I chatted with power brokers such as Ursula Menke, Commissioner of the FCAC, and key analysts from the OECD. I came home with a book full of notes, several hours of recordings and 16.8 pounds of literature.

I have a lot of writing to do in the coming weeks. In the meantime, here's a quick look at the top five themes that stuck out for me during this two-day international financial education event.

The Movement is Gaining Ground
Did you know that financial literacy was on the agenda at the 2006 G8 meeting? Or that Canada is a global leader in financial literacy? While there are still many countries which do not have financial literacy on their radars, there is no doubt that the international movement to educate and equip citizens around the world to make better financial decisions is gaining ground. Thanks to the work of a variety of stakeholders such as the OECD, policy makers in several countries have accepted the idea that a money-savvy citizenry is good for global and local economies.

This is great because it means that we can move from spending money on convincing politicians to act toward figuring out how to spend money on financial education. The question these days is not so much why but how.

Tests and Measurements
One of the main themes of the conference was evaluation. How do we know which financial education programs and projects are worthwhile? Presentations and workshops on this topic delved into identifying vulnerable populations, what money topics to teach and establishing best practices for implementation and evaluation.

There were also discussions about educational resources and how those should be evaluated. There was a plenary that looked at the importance of evaluating the many financial literacy projects that are springing up around the world. Are they cost-effective and efficient? The OECD along with policy analysts from around the globe are working on the evaluation issue, especially as it relates to bringing financial education to the school curriculum.

Coming to a School Near You
I am beginning to believe that ten years from now personal finance education will be part of the primary and secondary school curriculum. In Canada, this is already underway. Starting this fall, Ontario teachers of grades four through twelve will be teaching personal finance in their classrooms. We are still a long way from a national movement in this direction, but at the conference I heard "off the record" that all of Canada's education ministers are on board.

Globally, Australia seems to be way ahead on this. They have had financial education in the schools for several years. Their advice to advocates from countries where the ministers of education are less open to the idea is to frame financial education as a "value add" to the existing curriculum and give up on the dream of making it a stand-alone subject. The other secret they say is to provide classroom ready resources so that teachers feel confident delivering the material.

Nudge or Educate Debate
Several plenaries and workshops dovetailed on the debate as to whether or not consumers should be educated or nudged towards making a particular financial choice. Education is straightforward and includes teaching kids about money in schools or providing consumers with educational materials or workshops or private consultations that will help them make smarter decisions.

A nudge, I learned, is more controversial. For example, should governments automatically enroll employees in a state-run pension plan and leave it to the employee to do the opt-out paperwork? This is a hot topic. The education advocates say that this is not really ethical, while the nudgers argue that this is an effective way to encourage more citizens to save for retirement.

Another part of this debate is the relatively new field of behavioural economics, the study of consumer choice at the brain level. Apparently, our brains are not well designed to handle credit cards and other tools of the modern financial system. And with the increasing number of complicated products and smart technologies, our brains are going to need some retraining.

Technology is Upping the Stakes
I understand that very soon it will be possible to make a purchase with a wave of your smart phone. There will also be easy access, instantaneous offers of small credit amounts that will be sent through your phone. Mobile banking is growing, too, and there is a great deal of concern over how low-income and at-risk populations will be able to cope.

Panels of industry experts talked about how financial education initiatives should address the issue. One workshop looked at how social marketing and communication tools might be used to improve the effectiveness of these initiatives asking how can social media influence and improve the financial awareness of consumers? What a great question and we don't have the answer yet.

Like I said, I have a lot of material to sort through and a lot of writing to do in the coming weeks. If you have any questions or comments about the conference, or have a topic that you would like me to address in  a future article, please email me at moneyme@telus.net.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme@telus.net.

1 comment:

  1. Sounds like a cool conference. My opinion on education is it good, but finance has no one right answer (although many wrong ones). How much and where someone needs to invest are totally up in the air. I'd like to know what the right education is? I would hope it covered the gamut up to entrepreneurship.

    You're right about the behavioural economics. Most of us are zombies, owned by the sophisticated marketers.

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