It isn’t often that I confess to any sins, so please take note when I tell you this – there are times when I can be incredibly callow.
About a decade ago or more, Victoria Nye, a lady many of you may remember, was the director of training and education at Autif, now the Investment Management Association. Victoria was very keen on the subject of educating young people about money.
Back then, few of us gave the topic much thought. I recall writing a column in one newspaper pooh-poohing the idea as pointless. Drawing on my own experience in the classroom several decades earlier, I wrote that all I could remember from those days was some phallic innuendo from The Duchess of Malfi.
Over the years, my mind has gradually changed. A few years ago, I was involved in preparing a series of lessons for pupils on behalf of ProShare, as part of its schools education project. I saw at first-hand how seriously it took this issue.
A year or two later, I wrote a long article on the topic of financial education. This meant talking to teachers, pupils and their parents, the Personal Finance Education Group, banks and financial institutions who support education projects, charitable organisations, government departments and others involved in this area, including financial advisers. The commitment of those taking part in various educational initiatives was striking.
More and more, it became obvious (even to me) that there is a desperate need for financial education, of various types and levels throughout society. Although giving kids a basic grounding in money-related topics is useful, this kind of work cannot just be aimed at children. It needs to target adults too. People need help and advice – and education – at all the specific life-change events they face – starting a job, buying a house, getting married or divorced, having kids, losing your job, falling into debt, you name it.
What is interesting is that many IFAs still do not appear to think this is an important issue.
Last week, the FSA announced it was appointing Tony Hobman as chief executive of the newly created Consumer Financial Education Body responsible for delivering this money guidance project. The new body will also take over the regulator’s national strategy for financial capability, derided in the past for the confusing and disjointed education schemes it has tried to roll out over the years.
The cost of the CFEB has been estimated in some quarters at £1.7bn over the next 52 years – with the cost split equally between the Government and the financial services industry. The amount of money involved is good news as one of the main reasons for the lack of poor quality financial education both in schools and the community more generally has been a tiny budget which barely made any inroads into the sometimes desperate needs of millions of people.
Another encouraging sign, which I have argued in favour of for some time, is that the body itself has operational independence from the FSA itself. Although there are inevitably links between the two, money education is not a key role for a financial regulator. To do the job well – including giving money advice at face-to-face meetings across the UK – requires skills the FSA not only does not have but should not even try to acquire.
This is one of the few positive measures that this Government has managed to bring about, so you would imagine that advisers would generally be supportive.
No such luck. A quick glance at not just Money Marketing’s website but also several other IFA-oriented forums suggests the only thing they want to talk about is whether Hobman’s appointment is another case of “jobs for the boys” or how wasteful the whole exercise will be from financial perspective. All advisers seem to be doing is moaning that might themselves end up having to pay for this service. Or that when it is set up, they will lose clients to it.
They seem unable to understand that well educated and financially aware consumers are an essential part of the equation if IFAs are to do their jobs successfully. In any case, the financial dilemmas of those who will be attending face-to-face money guidance meetings are not generally issues taken up by independent advisers in most cases.
As for “jobs for the boys”, one might imagine that someone who spent two years working for a TV channel that specialised in delivering accessible financial information to viewers and four years working at ProShare, one of the most successful initiatives aimed at teaching young people about money, would be considered a good candidate for the job – clearly not the case for some advisers.
The CFEB will almost certainly make some mistakes, waste some money, fail with some of its initiatives. Failure is an inevitable part of the learning process, after all. In the long run I hope it will achieve what it sets out to do.
If it does, everyone stands to gain, including advisers. The only alternative to a well educated public is tougher rules to prevent bad advice and even worse products being foisted on gullible consumers. Is that what IFAs really want?
Nic Cicutti can be contacted at firstname.lastname@example.org