It’s been a long and extraordinarily difficult year. And while the first half of 2021 will continue to be a challenge, as we look ahead to the second half of the year, it will finally be time for resilience, renewal and rebuilding confidence in our collective future.
Even as much of the country is once again engaged in lockdowns and states of emergency, there is quiet optimism about the future as vaccine rollouts are finally underway and we can envisage a post-pandemic future. But there’s also fatigue in equal measure, and where we go from here remains an open question.
Many Canadians face the daunting task of digging out from these dark times and looking toward the future through the prism of their current vulnerabilities. It will take discipline and conscious societal effort to use insights from the past year, evaluate where we currently stand and what we need to do to chart a course toward financial wellbeing for all Canadians. While professional financial planners hold a key to this daunting challenge, the subject requires a coordinated societal effort among professionals, industry and, indeed, governments across the country if we are to succeed.
In this context, the Financial Consumer Agency of Canada (FCAC) is currently in the process of renewing its national strategy for financial literacy for the next five years. As the strategy is renewed, the FCAC needs to ensure it better reflects the evolving needs of Canadians, particularly given the current economic climate and low consumer confidence. Given today’s climate, this strategy is more important than ever, and, if successful, it could have a profound impact on how Canadians meet future challenges like the ones of the past year.
As I consider what a successful strategy will look like, a few things stand out.
First, will the strategy help Canadians build financial self-efficacy and self-confidence? While the essential argument that the more financially knowledgeable Canadians are, the better their money decisions and the greater their financial wellbeing will be may hold true to a certain extent, a growing body of knowledge in behavioural research shows that knowledge alone does not translate to positive actions. Higher self-efficacy — the belief in one’s own ability to succeed — is more likely to be the most positive contributing factor to effecting better outcomes.
While the Covid-19 pandemic has been deeply challenging for most Canadians, it has also presented a renewed focus on the importance of financial planning, and created opportunities to consider proactive, actionable ideas that will create positive outcomes. Governments, regulators and industry must work collaboratively to ensure that Canadians not only have the financial tools and knowledge they need to help themselves, but that they gain greater financial self-efficacy in the process.
Second, financial literacy strategies tend to be geared toward adults in their earning years. While it’s important not to lose sight of improving financial behaviours in adults, it’s always easier to instil positive habits and behaviours before bad ones are formed. As a result, we need to take a long-term view of what constitutes success. More energy and effort need to be spent focusing on instilling the right values and behaviours in youth, before bad habits are formed. Efforts by several provinces that are embedding financial literacy in the school curriculum are commendable, but we need a coordinated national plan on how to deliver the best curriculum possible across the country in a way that will make a positive impact on young Canadians’ relationships with money.
Third, when I speak to everyday Canadians about money and financial advice, it is clear from every conversation I have how complex people’s financial lives are, and how confused Canadians are about the financial advisory sector. They simply don’t know what advice they need, nor do they understand whom they can turn to for help. The FCAC’s new financial literacy strategy can help Canadians understand the different types of financial services and teach them how to seek the right counsel from the right professionals.
Finally, a strong financial literacy strategy must be future-focused. This is a long game, and the strategy needs to encourage Canadians to look at their future selves as they get a handle on their current finances. Helping Canadians gain a clear-eyed view of their current financial situations, helping them determine how they spend their money today and enabling them to chart a course for the future must be at the core of any successful strategy.
We live in an age of instant gratification; a time when messages about a strong financial future for Canadians compete with infinitely more compelling short-term priorities. A sound national financial literacy strategy and the work of the FCAC and its partners in government and industry are more important than ever. Given the year we’ve just been through, I hope Canadians will be listening.