Texas, United States of America
November 12, 2014
(Video script)
Thank you for the opportunity to address your conference, and I’m sorry I could not be there to speak with you in person today. November is Financial Literacy Month, and this year the Financial Consumer Agency of Canada known as F-C-A-C, was busier than ever – hosting a national conference on financial literacy in Vancouver, launching a financial literacy resource database accessible to all Canadians, and continuing our preparations for the launch of a national strategy on financial literacy in 2015.
As many of you will know, the Government of Canada is committed to improving the financial literacy of Canadians. My role as Financial Literacy Leader is to ensure all Canadians have the knowledge, skills and confidence to make responsible financial decisions.
This work requires broad-based cooperation among many stakeholders active in the areas of financial learning, planning and decision-making. Obviously, financial planners play a key role in their client’s lives, and client-planner meetings are a primary learning-point for many Canadians.
This is why the Taskforce on Financial Literacy recommended that the government work with financial services providers on delivering educational information and ensuring that it is fully understood by Canadians at “teachable moments” so that people can make responsible financial decisions.
As many will remember, the Taskforce was created in part as a reaction to the 2008 financial crisis. This was a watershed moment in bringing attention to how the overall economy affects all our lives.
Despite all of the media attention given to personal finance in the years following the 2008 crisis, the overall financial literacy of Canadians remains a concern. The 2009 Canadian Financial Capability Survey found that only 25 percent of Canadians scored at a high confidence level in all five areas tested. Results of the 2014 fielding of this survey will be released this month, and while we hope to see an improvement, economic reports continue to highlight high household debt, and more Canadians are facing a lack or shortfall in their long-term savings for retirement.
Consumers today face a more complex financial marketplace, with a wide range of financial decisions to make when planning for their future.
In this situation, financial planners play an important role. You have the opportunity to add value and wealth to your client’s lives by helping to educate them and build their confidence to make responsible decisions.
I mentioned the Canadian Financial Capability Survey and the five areas it tests. In each area, financial services providers can help their clients achieve goals:
Live within your means: While you can’t ensure your clients spend less than they earn, you can make money-saving suggestions and inform them of the importance of paying down debt every month.
Budget wisely: Explain the money-saving benefits of careful budgeting and be able to point your clients in the direction of online or printed budget sheets and other budgeting resources.
Planning ahead: This is obviously a key of support for your clients, helping them to take full advantage of possible employer pension plans, matching of retirement savings, and learning about and using the RRSPs, tax-free savings plans and other long-term saving vehicles available to all Canadians.
Choose products carefully: Help clients choose products that have appropriate costs and benefits for their lifestyle and income level.
Staying informed: Encourage your clients to seek out additional sources of information such as FCAC’s website and its financial literacy resource database where they will find a wealth of resources to help strengthen their financial acumen.
I know many of you are already taking the above steps with your clients, helping them to become more informed and educated as clients. This will allow them to manage their money more wisely, reduce their debt load and increase their long-term savings. You will play a key role in helping them achieve their long-term goals.
Before I close, I would like to speak about our shared responsibility in the area of financial literacy. In the coming years, I would like to work more closely with you to strengthen the financial literacy of Canadians. Collaboration is key to achieving our common goals.
As mentioned, in 2015 we will release the National Strategy for Financial Literacy. As you may know, Cary List of the Financial Planners Standards Council is a member of the National Steering Committee on Financial Literacy, as are several non-profits and industry associations like the Canadian Bankers’ Association among others.
We need all of you to participate in working toward the goals of the National Strategy.
The result we hope for is to see higher rates of household savings and lower debt levels. Ideally, we should see consumers having greater knowledge about financial products and services, and their rights and responsibilities in relation to these products and services.
I would also like to see enhanced skills to manage their money and the confidence to ask the right questions of their financial professional, to make informed and responsible financial decisions.
A lot of good work has been done, but a coordinated approach can accomplish even more. The Canadian Financial Capability Survey was refielded in early 2014 and will be refielded again in the coming years, allowing us to benchmark our progress.
Financial professionals are valuable contributors to the well-being of Canadians and of our economy, with an important role to play in their clients’ lives. This will remain a constant even as the marketplace changes.
I look forward to engaging with the financial services sector in the coming years, and hope to see many of you involved in our common effort to strengthen financial literacy in Canada.
Thank you.
