Restoring broken trust in the marketplace hinges on fostering financial literacy among the general public, said industry experts who spoke at the Investment Funds Institute of Canada’s Financial Literacy Forum in Toronto on Wednesday.

“The biggest barrier to market recovery is a lack of trust in the market, that it will recover,” said Patricia Bowles, director of communications and education at the British Columbia Securities Commission. “The more educated people are about investing, the more confident they will be when talking about money [and investments] with their advisors and faith they will have in the industry as a whole.”

Prior to the credit crunch, programs fostering financial literacy and investor education were “nice-to-have” initiatives that various securities commissions and the federal government had taken on, Bowles said. However, October’s stock market crash changed that. “A national program and strategy must be put in place to make such programs “must-haves,” says Bowles, noting that it’s up to the Canadian public school system, government agenciesand support from not-for-profit organizations to ensure this happens.

The industry, especially fund companies, do have a “tricky role” to play in educating investors. There’s a fine balance in educating investors for the sake of education vs educating them to market a product, she said. This is why outreach is best made through youths in the school system.

So far, British Columbia is the only province in Canada with a mandatory life skills training program. Being savvy in the financial system “is not considered a fundamental life skill like math or English,” said Bowles, suggesting that this may be a reason why other provinces have been slow to adopt similar programs. With student debt totalling $13 billion in Canada, financial literacy among youths cannot be ignored any longer, she added.

“The current financial situation has illuminated this issue,” added Casey Cosgrove, director of financial literacy initiatives with Toronto-based Social and Enterprise Development Innovations, a national not-for-profit agency committed to helping low-income Canadians reach their financial goals. He pointed out that youths learn unhealthy management habits from adults, which is why financial literacy in public schools are so important.

For the past five years, the BCSC has made headway among youths through its financial literacy initiative called “the City”. In the program, all grade 10 students in B.C. must attend 21 hours of financial literacy education a week. In 2005, SEDI helped establish the National Steering Committee on Financial Capability. Its first meeting was held in Toronto in February in 2007.

“There’s an incredible amount of passive information out there about investing on websites and magazines, which is great if you know what you’re doing,” says Cosgrove. “But there’s little that’s active information out there that’s engaging and helps youth and adults build confidence in investing.”

Relevancy is the “stick factor” in financial literacy, Cosgrove said, noting that students will only pay attention to content that’s directly related to them. For instance, he gave examples such as budgeting for a new pair of jeans or to pay a cellphone bill.