In last week’s Budget, Chancellor Philip Hammond pledged to improve numeracy and “mastery of maths” skills among the next generation of schoolchildren.
Many in the financial services industry would like to see similar initiatives to drive up standards of personal finance education as well.
For many years those concerned about poor standards of financial education in the UK have been focused on getting this subject onto the school curriculum. This finally happened in 2013, when personal finance became a mandatory part of maths and citizenship lessons in secondary schools.
But the future of personal finance education isn’t just focusing on schools. Campaigners say that there is still much to do to improve and extend the teaching of money issues to younger people.
But they also want this to be supported by educational initiatives to improve financial literacy in the workplace – and financial advisers have a vital role to play in delivering these services.
New technology is also changing the way advisers educate people about their finances.
Web-based tools, apps and podcasts all have a role to play in improving financial capability, and helping a wider population engage with and understand more about money issues.
For example, Jacksons Wealth director Pete Matthew has now recorded more than 200 episodes of his Meaningful Money podcast, which have been downloaded more than 1.1 million times.
These podcasts cover everything from money basics – such as budgeting and insurance – to more complex financial planning issues, such as utilising pension freedoms and inheritance planning.
Part of the success of these podcasts is their approachable style. Matthew says: “I wanted to convey my belief that financial planning is really simply for the vast majority of people. It is possible for anyone to achieve their goals, whether financial or otherwise by following some pretty basic rules.”
This jargon-free approach to financial education is evident in the fact that his most popular podcasts are about the nuts and bolts of investing.
Making finance fun
While some advisers are launching their own educational initiatives, others are teaming up with organisations like the Personal Finance Society, or Money Advice Service.
The PFS runs a number of schools-based schemes. These have a two-fold approach: to help improve financial understanding among younger people and also highlight apprenticeships and job opportunities within the financial services industry.
Recent projects have included the Discover Fortunes initiative. This is a 60- to 90-minute event for a class of 16 to 18-year-olds. Rather than simply listen to a local adviser or wealth planner, these sessions are designed to get the students looking at the risk profiles of various clients, and deciding where they should allocate their assets, in terms of insurance, pensions, savings and investments.
PFS education relationship manager Caspar Bartington says: “This gamification of learning is the best route. No matter how impressive a speaker is, students will soon switch off in a presentation. We found there is much more interest from those who are more actively involved.”
He adds that the organisation is looking to build on this, and is piloting a new programme early next year, where it will “buddy up” PFS members with a local school or college. Members will be offered the opportunity to help with financial education in lessons, or offer mentoring or work experience to those interested in the sector as a career.
Bartington says the PFS has a database of around 400 financial advisers who are interested in supporting and participating in such events.
First Wealth director Claire Phillips is one of the advisers working with the PFS to help develop apprenticeship options for school leavers. But she says she also very interested in helping to provide financial education in schools.
She says she would like to see personal finance education “decoupled” from maths lessons. “Numeracy is obviously a vitally important skill. But a lot of people don’t like maths, or think they can’t do it, and this is potentially stopping them getting a better understanding of money matters.”
Phillips adds that for her the key is to make it as practical and as personalised as possible. She says using technology like phone apps, can help engage young people. “For example, if they can keep a record of what they spend, or what their parents spend on them during a week, it’s possible to then look at what kind of salary they might need to have this kind of disposable income.”
She adds that debt and interest calculations become more tangible for 16- and 17-year-olds when you start looking at what they might need to borrow for higher education.
Phillips says one of the issues for advisers looking to educate people about the basics of finance is resources. She says: “You don’t want to have to reinvent the wheel each time. It’s helpful to have resources available from organisations like the PFS.”
Young Money, previously known as the Personal Finance Education Group, is another organisation with a wealth of financial education resources. Its resources include Jangle, an app developed by Experian for parents who want to teach their children the basics of earning, saving and spending, and 2070 Launch Your Life, which aims to encourage longer-term financial planning among 14 to 18-year-olds.
Many advisers are looking to develop financial educational initiatives for those already in work.
Wealth at Work offers basic financial education programmes alongside more traditional advisory services.
Wealth at Work director Jonathan Watts-Lay says the firm makes the most of new technology and says things have moved on from a traditional classroom-based approach.
“We do still offer seminars, where we can discuss issues like budgeting or pensions, alongside one-to-one guidance. But we’ve found modelling tools a very good support mechanism.”
However, he says it’s not enough for an adviser to just design a “whizzy” tool that helps people calculate their weekly or monthly budget, or project what pension they are likely to end up with if they save a fixed amount each month. He says: “People need a ‘digital nudge’. You need to whet people’s appetite and get them interested in what these tools can offer them.”
The Liverpool-based advice firm – which works with a number of FTSE 100 companies as well as smaller firms – says it has designed a number of two-minute animations to help grab people’s attention.
The firm often targets its educational programmes to different demographics, for example, graduate intakes, or younger employers.
Watts-Lay says: “One of biggest growth areas we’ve seen is providing education to those aged 50-plus, particularly since the introduction of pension freedoms.”