Calls for increased financial education finally appear to have been heard, as the federal government has commissioned a new national task force on financial literacy.
The task force, announced by Finance Minister Jim Flaherty in Toronto on Friday, will be chaired by Sun Life CEO Donald Stewart. The task force was promised in the 2009 federal budget.
"Our economy is built on millions of everyday financial decisions by Canadians. Recent events have shown us that there are major risks and that financial literacy is an important life skill," Flaherty said. "Whether it is a question of saving for retirement, financing a new home or balancing the family chequebook, improving the financial literacy of Canadians will add to the stability of our financial system and make our economy stronger."
The first job of the task force will be to establish the current state of financial literacy, and identify best practices in other countries. The task force is scheduled to report back to the Ministry of Finance in late 2010.
"I was delighted when the Government of Canada invited me — and a group of eminent Canadians — to consider and report on ways to support all generations to grow into knowledgeable managers of their personal savings, taxation, investments, debt and protection," Stewart said.
Also named to the task force was Advocis president and CEO, Greg Pollock, who said it was an honour to be appointed to such an important project.
"We've all talked about the importance of literacy and numeracy to surviving in society, but its just as important that we have a basic understanding of financial issues," he told Advisor.ca. "Our association is of the view that if Canadians have more knowledge, they'll be able to make informed decisions."
He says the topic has become popular on a global scale, in recent years, after a 2005 report by the Organization for Economic Co-operation and Development called for improved financial literacy among its members.
Increased financial complexity has made this education more important than in the past.
"I think a lot of us were conservative in days gone by. We had paper money, and if we had the money in hand, we were able to purchase something; if we didn't, then we didn't purchase it," Pollock says.
At the end of the project, he hopes that improved financial literacy will make life easier for advisors, as clients will already be educated on the basics of the a financial plan.
"Advisors do take a lot of time sitting down with clients and educating them as best they can," he says. "I think the consumer with more knowledge will ask better questions and more questions, which in the end can only serve the consumer well."
The only practicing financial advisor on the task force is Ted Gordon, with Freedom 55 Financial in Ottawa.
"I really feel like I can make a meaningful contribution to the task force," Gordon told Advisor.ca. Not only is he a financial advisor, but he is also an accountant and teaches the Personal Financial Literacy course at Algonquin College in Ottawa.
"Overall, I'd say financial literacy is quite poor, because we receive no training," he says, pointing out that most people learn what little they do know from their parents, who were equally ill-equipped.
Financial literacy is more important than ever, he says, because the retail sector has become very sophisticated in its marketing strategies. Teaching consumers how to manage their money would help to level the playing field between those selling goods and services and the consumer they target.
The task force's first meeting will take place July 20, at Sun Life's head office in Toronto. This first meeting will focus on designing the process for consultations, which Gordon says will likely best be achieved with a cross-country tour.
Also serving on the task force are:
• L. Jacques Ménard, who will serve as vice-chair. Ménard is the chairman of BMO Nesbitt Burns and president of BMO Financial Group, Quebec.
• Edward (Ted) Gordon, financial security advisor with Freedom 55 Financial in Ottawa
• Evelyn Jacks, founder and president of The Knowledge Bureau
• Laurie Campbell, executive director of Credit Canada/the Credit Counselling Service of Toronto.
• Marcel Côté, founding partner of SECOR Consulting, as well as sitting on the board of directors for Intact Insurance.
• Patrick C. Foran, CTV News journalist and host of that network's nightly "Consumer Alert," segment
• Ruth Kelly, president and CEO of Venture Publishing Inc.
• Janice MacKinnon, professor of Fiscal Policy at the University of Saskatchewan, a fellow of the Royal Society of Canada, chair of the Research Institute on Public Policy, and member of the Board of the Canada West Foundation.
• P. Mitchell Murphy, career education consultant with the Western School Board in Prince Edward Island.
• Bill Schwartz, principal of Polestar Communications Inc.
• Jean Vincent, president and general manager of the Native Commercial Credit Corporation (NACCC).
The Canadian Life and Health Insurance Association was quick to cheer to creation of the task force, as well as such prominent positions for the insurance industry.
"As one of Canada's most respected and experienced leaders in our financial services sector, we are delighted that Donald Stewart has been chosen to chair this important task force," said CLHIA president Frank Swedlove.
The government has already launched a website for the task force, at www.financialliteracyinCanada.com.
(06/26/09)
Filed by Steven Lamb, steven.lamb@advisor.rogers.com
Originally published on Advisor.ca
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