Maybe it’s because I come from a long line of teachers that I think it’s time for a back-to-basics approach to savings. Whether it’s dusting off the adage of “putting away for a rainy day” or reviewing general math skills, we must embark on a multi-faceted approach to get Canadians back on track when it comes to their personal finances.

There’s no better time to start than now, especially as we begin a new year with the financial investment industry in full gear for the RRSP and tax-free savings account season. It’s during this period that many investors take stock of their personal resources and what they may need in the future. With record-high levels of personal debt and low savings rates, it’s also a time to encourage Canadians to rethink their savings habits and to become investors in their own future.

One of the first steps is to ensure that investors have a basic level of financial literacy — not only to help them with specific planning tasks but also to equip them with an ongoing life skill. Financial literacy will help them understand everyday financial planning issues such as budgeting, the consequences of not paying off credit cards monthly and the importance of an emergency fund.

Like learning a second language, good financial habits must be taught at an early age. I applaud the recent decisions of the Ontario and Manitoba governments to institute financial education in their provincial educational curricula in September. In Ontario, for example, Grades 4 to 12 will now be taught about income and debt.

The Report of the Working Group on Financial Literacy in Ontario also has recommended that basic concepts such as earning, saving, spending, investing, budgeting, credit and borrowing should make their way into the curriculum. This is a good start, but financial literacy courses should be enhanced annually so students can build on their knowledge as they progress through elementary and secondary school. And the sooner, the better: according to education specialists, the value of money begins to resonate with children as early as four to seven years of age.

But teaching youngsters about how to build and maintain savings, among other financial issues, is not just the purview of the education system. Leadership must be shown throughout the investment industry. That’s already being done, to some extent, through partnerships between financial services firms and with various third parties, such as Junior Achievement, that help young people learn about money.

Many investment industry members are also involved in providing investor information about their products and services in easy-to-understand and accessible formats, including online and in handouts. I believe I speak for the industry when I say we are willing to do more to ensure a strong foundation of financial literacy for the younger generation.

A major resource also lies in financial advisors. An Ipsos-Reid Corp. survey has shown that households that use a financial advisor to help set and meet their personal financial goals have twice the rate of participation in RRSPs, TFSAs and RRIFs than those who do not get this type of informed advice.

A recent paper by the Institute for Research on Public Policy also suggests that investors may require help as financial subjects become more complex: “Teaching Canadians that they should seek advice before making a major financial decision — purchasing a home, choosing an insurance policy, planning a retirement — could be the most important lesson that a basic financial education can provide.”

There is also a need for major improvements in how pension plans work. While much has been made about expanding the Canada Pension Plan to cure the pension problem, this is simply a Band-Aid solution that ignores the root issue: Canadians need to learn the financial concepts and basics of financial products so they will have the knowledge, skills and confidence to make responsible financial and investment decisions throughout their lives. They deserve choice and access to other resources.

In the short term, we need changes to current regulations as proposed by the Investment Funds Institute of Canada — to help those who are out of the workforce temporarily (due to child care or loss of job, for instance) or to help those already in retirement manage their incomes by, for example, raising the age at which RRSPs must be converted to RRIFs.

It’s not old-fashioned to save for the future, for children’s educations and for a home. The investment industry has a responsibility to help instil a savings culture among Canadians to ensure their hopes produce concrete results and not just wishful thinking. IE



Blake Goldring is chairman and CEO of AGF Management Ltd.