The urgent need to have better-informed consumers who can make decisions about their own financial affairs must remain firmly at the forefront of the political agenda. It important for individuals and has wider policy implications for the Government.
The ultimate goal should be it will lead to less people in debt, less reliance on state benefits and a greater number taking and retaining responsibility for their financial futures. This should have a positive knock-on effect on the financial advice industry as more people understand the benefit of financial advice. Even with improved knowledge, advice remains important as there are many challenges for individuals, not least of which will be when and how to convert retirement savings into income.
The IMA is pleased to see the interest being taken by the Treasury select committee in the Government’s Money Advice Service. Funded by the financial services industry, MAS aims to help everyone through provision of clear and unbiased advice. It is in everyone’s interest that the MAS has the widest impact.
In the IMA’s submission to the committee’s inquiry, we argued, as did others, that MAS needs to do more to support financial education in schools. It is encouraging to see MAS has since announced it plans to introduce a voluntary code of practice for providers of financial education to young people in the interests of a more joined-up and comprehensive approach.
It seems such a no-brainer that financial education has to start in schools that it is difficult to understand why it is not part of the national curriculum. The teaching profession may argue there is enough on there already and there are too many other subjects vying for space but surely the evidence is overwhelmingly in its favour?
It is a means to develop key skills and attitudes at an early and relatively receptive age, so later in life people are more likely to be able to manage their own financial affairs. Mathematics teachers have said there are signs it can improve numeracy. A 2008 Ofsted study found that effective personal finance education in schools gave students the ability to make sound financial decisions such as working out the best mobile phone tariff based on projected usage and identify what factors were relevant to investing a sum of money, balancing risk and return.
In addition, parents and children themselves have asked for financial education. Research by RBS in 2011 showed 90 per cent of teenagers thought learning about money was important. A YouGov poll showed 93 per cent of teachers and parents thought personal finance education should be taught in schools.
It may be difficult to assess the true effectiveness of any programme of financial education until many years down the line. Most of us will have already retired. But we should see future generations develop a keener understanding of money matters and a greater desire to engage across the financial services industry from the taking of advice to investing for the future. One can but hope.
Mona Patel is head of communications at the Investment Management Association