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Ian McKenna: Focusing on financial basics can lead consumers to advice

Delivering basic financial education online could provide potential clients for advisers


One of the main trends I highlighted in my reports from Finovate in San Jose last week on the Money Marketing website was the increasing range of personal financial management tools being deployed elsewhere in the world to help consumers manage their finances.

While such tools are generally in short supply in the UK, new research published today by The Open University Business School reinforces the urgency of addressing this gap. This highlights that despite signs of economic recovery, consumers are still struggling with daily budgeting.

The research coincides with the launch of an important new initiative which gives an example of the sort of investment I believe we should be making as an industry. In its study OUBS reveal that nearly half of all UK adults (46 per cent) never keep a household budget.

Actually, from my work internationally I suspect that if anything this figure is rather on the low side but it clearly identifies the need for action by our industry. If people do not understand their income and expenditure, how can they have the confidence to invest in regular long-term savings?

To help address this need, an interactive online course to help consumers navigate the personal financial maze will be available via The Open University Business School’s True Potential Centre for the Public Understanding of Finance. It is being delivered as a Massive Open Online Course – an increasingly popular way of learning that enables teachers and lectures to reach very large audiences.

The Managing My Money course is designed to help consumers develop their personal financial capability and understanding where they have no previous experience studying the subject. Around three hours’ study is involved each week and the course is delivered via the OU’s online social-learning platform FutureLearn.

It involves an array of audio-visual clips, interactive discussions and quizzes, and engaging resources. Topics covered include how to compile a budget; making effective decisions about saving and spending, managing and understanding personal debt; how mortgages are used to finance home ownership; the different pension products available; pension planning, and how to make rational decisions when buying insurance.

Individuals can register for Managing My Money, which is free of charge to the general public, at The first installment will be available from Monday 12 May and people can join the course up until Sunday 25 May.

The course has been made possible by funding from True Potential but is entirely independent of the firm. Having had advance access to some of the material, it is genuinely engaging, fun and interactive, with lots of use of video and other media.

The service begins by helping users understand how they can build a personal fact-find and build their own budget. Subsequently users learn to create their own household balance sheet allowing for savings and investments and learn about issues such as net worth and gearing. 

This is all done at a level that should be understandable to consumers with little or no experience of personal finance.

Failing to help consumers with these basic issues means that as an industry we are denying ourselves millions of customers each year. While I believe this is an issue we should address as an industry, I must applaud True Potential for making the investment to make such a valuable service available to all consumers.

This service will clearly create thousands more customers suitable for advice – now we, as an industry, have the challenge of working out how to provide them with advice solutions at a price they can afford.

Ian McKenna is director of the Finance & Technology Research Centre 



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