The Financial Planning Standards Council (FPSC) says the federal government’s efforts to promote financial literacy would be best served by getting Canadians to change the way they behave.

In its submission to the Task Force on Financial Literacy, the FPSC addressed three of the areas that the Task Force has solicited feedback on: understanding financial behaviour; retirement; and protecting against financial fraud.

“FPSC supports the advancement of financial literacy for all Canadians. The past year has underscored that the status quo is insufficient in ensuring the economic, financial and social wellbeing of individuals and of our country,” says Cary List, president & CEO, FPSC.

Understanding financial behaviour

Financial planning is a learned behaviour and a life skill. Recognizing that all too often people are still not acting in their own best interests when it comes to their personal financial planning, even when they know better, FPSC recommends the Task Force focus on strategies that will enact behavior change.

Among several recommendations forwarded by FPSC on this issue, FPSC urges the Task Force to recognize the importance of starting financial literacy early in life, and called upon all provinces to institute compulsory learning about money and personal finance beginning in grade school.

“Managing money is a life skill as important as language, reading and arithmetic. It is far easier to shape good financial behavior earlier in life than to change it later on,” says List.

While the idea is to start young, it is imperative to inspire behavior change among Canadians of all ages — as such, FPSC calls for a need to more effectively understand and convey the value of financial planning in helping people achieve life goals and with it, better emotional and financial wellbeing.

Planning for retirement

The Task Force asks, “What can we do to counteract people’s inclination to ‘live for today’ instead of planning for tomorrow?” Instead, FPSC recommends reframing the question to be, “What can be done to help Canadians see the value in financial planning to meet the continuum of life goals and needs throughout all life stages?”

“As long as financial planning is seen as something that is hindering one’s ability to ‘live for today’, financial literacy efforts will fail,” says List. “When people embrace the idea that tomorrow will also one day be today, only then will they be ready for financial planning and for charting a course to financial security.”

The Task Force also asks, “What kind of information do people need to make good saving and investment decisions for their particular circumstance?” While FPSC supports the encouragement of a “savings culture”, it recognizes that too many Canadians have a misconception that having savings, investments or RRSP’s means they have done “financial planning”. In actuality, financial planning looks at a person’s estate planning, tax planning, retirement planning, risk management, financial management, and asset management needs, and the interrelations among each of these areas.

FPSC strongly suggests the government could better promote financial planning with initiatives similar to those seen in the 1980s, such as ParticipACTION. Funds from lottery tickets and gambling should go towards sponsoring ads which promote responsible financial planning.

Protecting against financial fraud

FPSC urges the Task Force to recognize that financial literacy initiatives should include information and guidance on where to look for financial advice and how to identify qualified, ethical, competent professionals.

With the exception of Quebec, there is currently no comprehensive regulation of the term “financial planner” or “financial advisor”. Anyone can call himself a “financial planner” or “financial advisor” without meeting standards of competence or ethical behaviour.

To protect against fraud consumers need to be educated on the questions they should ask before they retain a financial advisor or make an investment.

FPSC recommends that governments and industry promote the need for consumers to protect themselves by checking credentials and licenses through the appropriate authorities before diving in with an advisor.

IE