There is no question that Canadians are concerned with the rising costs of living and are increasingly uncertain about their financial futures. The most recent Nanos sentiment poll found that Canadians’ top concerns are inflation, the economy and the cost of housing. Governments and industry need to address these problems.
This is why an engaging and responsive financial literacy ecosystem is essential for Canadians to navigate their financial futures.
In these challenging times, we find ourselves constantly considering how to enhance Canadians’ knowledge and awareness of all the options and opportunities available to make their paycheques go farther and improve their financial decision-making skills to ensure they are more financially successful and secure in the long run. Knowledge is power and Canadians need to be equipped to handle these uncertain times.
November is Financial Literacy Month and financial industry leaders in government and the private sector need to take stock of Canadians’ financial concerns and consider what more can be done in the short and long term. We’re doing OK, but there are some important gaps that must be addressed. And the federal government, through the Financial Consumer Agency of Canada (FCAC), which oversees the nation’s financial literacy architecture, needs to take more of a lead.
There appears to be a strong correlation between financial literacy and economic success. Denmark, often near the top of global financial literacy rankings and other metrics relating to income and standards of living, has entrenched financial education into its school system, mandating it be taught from grades seven to nine. Canada could do the same.
The public and private costs of being illiterate in today’s financial climate are staggering to consider and the impacts and risks go far beyond financial, health care and economic pressures. It is important that Canada strive to become a world leader in financial literacy education, providing dynamic, up-to-date and detailed information relating to housing, financial technologies and product information to all Canadians.
Fortunately, Canada has a financial literacy framework legislatively in place. The FCAC first helped launch the month-long literacy awareness campaign in 2011. Over the past decade, the agency has helped create dozens of valuable programs and toolkits for Canadians, which are delivered by hundreds of organizations across the country.
But the financial services landscape is changing and constantly evolving and there is more work to do to fully equip Canadians of all ages and stages in life with the tools they need to make sound financial decisions. New financial service providers, online platforms, technology-driven products and rapid regulatory changes have all contributed to the ongoing need to ensure no Canadian is left behind.
This makes financial literacy a complex and multifaceted issue that affects people differently, requiring tailored information and services. This is becoming an even more pronounced need in the new interest-rate environment, making one-size-fits-all solutions even less effective.
Financial literacy needs to be actively delivered in multiple formats to help Canadians do more than just budget and manage debt. In 2023, financial literacy should also include education on complex risk environments, AI, emerging investment opportunities, regulated vs unregulated service providers and the risks related to each. Best-in-class financial literacy frameworks should also ensure products and services are easy to understand from the view of the average person and more transparent about data use, services offered and fees.
Similarly, ensuring Canadians have access and sightlines to all the options available is critical so that they avoid options that may cause them more harm, stress, or risk in the long run.
While there are more financial literacy resources available than ever before, these resources can be hard to find and hard to assess for credibility. Industry-led education is an important part of the mix, but education that is delivered by the government is going to be even more effective and efficient in reaching more Canadians, especially those most vulnerable. We believe there is scope for the FCAC to take more of a lead and the organization should be supported to do so. The FCAC can enhance its work with the financial industry by doing more co-design, promotion and increased delivery of objective and timely financial literacy information and programs to all Canadians, rather than relying primarily on industry and non-profit distribution.
Exposure and access to timely and objective knowledge, tools and supports have never been more important for Canadians. It’s time to level up our efforts as a country to ensure that our collective financial future is bright.
Tanya Woods is the head of government and regulatory affairs and policy counsel at Questrade