Financial advisors usually have a break after the RRSP season — but not this year. Many will be studying the 138 pages of fine print that make up the Canadian Securities Administrators’ new registration requirements contained in the proposed National Instrument 31-103 and related documents. Released in late February, these proposals will affect just about every aspect of how financial advi-sors do business.

One of the many areas covered by the proposals relates to providing meaningful disclosure to clients about a variety of matters, including fees, charges and conflicts of interest.

Those in the industry who have tried to provide such disclosure know it can be very challenging. An insight into why it is challenging is found in the recent report of the Canadian Council on Learning, entitled State of Learning in Canada: No time for complacency, which is available at www.ccl-cca.ca.

The report notes that despite the fact that Canada has one of the most highly educated populations in the world, about 42% of the adult population, or nine million Canadians aged 16 to 65, lack the literacy skills to succeed in today’s economy. Literacy is measured in terms of the ability to find, synthesize and use information from various types of texts and documents. In addition, the report says, 50% of Canadian adults lack the ability to manage numbers. And the data show literacy and numeracy skills decline with age.

This has enormous implications for the financial services industry and the way it interacts with clients and potential clients. This is particularly so as more pension plan sponsors turn to defined-contribution pension plans and group retirement savings plans and look to the financial services industry to provide plan participants with the financial planning and investment advice necessary to manage their investment risk and provide for their financial well-being. A similar situation exists for the industry when it deals with older clients.

The low level of adult literacy places a heavy onus on the industry to ensure not only that the advice it provides is suitable but that clients also comprehend the information that is provided to them and are able to apply it to their own situations.

It is arguable that there should be a heightened standard of care when dealing with a person lacking in literacy and numeracy skills who, as a result, may be considered vulnerable or a person suffering from a disability.

A major part of the CCL report is directed at the necessity and the means of addressing Canada’s literacy problem, with particular emphasis on the need for adult learning and workplace training. “Lifelong” and “life-wide” learning are recognized as the new imperative.

The report points out that literacy today means more than the ability to read and write. To succeed economically and socially, adults need the ability to analyse information, understand abstract ideas and acquire many other complex life skills. High literacy skills are critical to a healthy economy and society.

The report’s research indicates that investment in literacy is three times more important than investment in physical capital in increasing productivity. Countries with literacy scores 1% higher than average enjoy 2.5% higher average labour productivity and 1.5% higher GDP per capita.

Although it may have been an unintended consequence of the registration reform proposals, the emphasis on meaningful disclosure of material information affecting the registrant-client relationship may serve as a catalyst to raising adult literacy levels through workplace education and training — and economic productivity and well-being. But, at a minimum, the proposals will place a heavy onus on the financial services industry to ensure that clients comprehend the information its members provide.

This, in itself, should improve literacy and numeracy levels, as well as economic productivity and well-being. IE