Enhancing the financial literacy of the average Canadian is surely a worthy goal, but it’s no substitute for a more robust retirement savings system and a better regulated market.

The push for a national literacy strategy is an admirable endeavour. There’s no question that the more Canadians understand about finances, the better equipped they will be to make smarter consumption choices in their day-to-day lives. Disturbingly high levels of household debt indicate that this sort of instruction can’t come soon enough. Yet, as a good number of the submissions to the federal Task Force on Financial Literacy point out, changing consumer behaviour probably is going to require a good deal more than a few brochures about financial products.

Policy-makers must take note of the structural disincentives to prudent financial behaviour, such as saving for retirement, that clearly exist. Faced with high-cost, low-return retirement savings options, households might decide that they are better off consuming most of their income rather than saving it.

There’s not much policy-makers can hope to do about the gross returns that are available, but they can try to bring down the cost of investing. Households without workplace pensions face a much costlier road to adequate retirement savings. Making access to large pension funds easier would provide a more attractive route to substantial savings. Similarly, fostering more cost competition in retail investments could also help encourage more private savings. Achieving those goals would likely involve attacking some of the inherent conflicts of interest and market distortions that keep the costs of investing higher than they should be.

Requiring financial services firms and advisors to put their clients’ interests above their own could also lead to more cost-effective saving behaviour by consumers, replacing expensive, high-margin investment vehicles with cheaper substitutes. Ideally, the industry would lead the way on this, but the record of firms that try to compete by building a better mousetrap in the financial services business is not great. Often, mere marketing wins the day.

The sort of fundamental reform that’s needed is not going to come from the bottom up. Rather, policy-makers are going to have to impose change from above if they genuinely hope to improve consumers’ ability to manage their finances.