An Australian finance broker association has told its industry watchdog that financial literacy is overdue for a makeover, but does NZ need one too?
Personalised and measurable financial literacy programs will be of more benefit to consumers and advisers over broad-based financial literacy schemes, the Finance Brokers Association of Australia’s CEO Peter White told the Australian Securities and Investments Commission.
“For effective financial literacy, the outcomes of learning need to be measurable. That then means it must be to the individual and not to groups as such. Tools on websites that are trying to educate a mass group, but have no means of showing that an individual has learnt anything do have their place for general information, but true financial literacy needs the outcomes measured for effectiveness,” he told NZ Adviser’s sister site Australian Broker.
According to White, two new streams of effective and measurable literacy systems are set to enter the Australian marketplace for borrowers, which will also provide best practice for continuing adviser education.
New Zealand adviser associations may be of similar opinion as independent board member of the Professional Advisers Association (PAA) Angus Dale-Jones told NZ Adviser that the adviser profession as a whole can do a great deal in helping to improve financial understanding within the country.
“Anything that financial advisers can do to help consumers understand the complexity and understand the positive contributions that financial services can make to all of our lives, particularly people with limited financial circumstances - I think a lot of work could be done there.”
Dale-Jones says the push cannot be done by the government alone and needs to be led by the profession, as they are the people in closest contact with consumers, as well as digital tools.
“All of the associations are trying to find ways of getting people to understand how to use advisers better but also how people can use their self research on the internet together with speaking to somebody.
A leading financial literacy commentator and joint founder of global credit education company, GlobalED Kym Dalton, told Australian Broker that more effective financial literacy measures would benefit advisers and consumers.
“Having recently returned from the USA where a round of discussions were held with lenders, mortgage insurers and regulators it’s clear that the issue of the lack of borrower comprehension when considering mortgage products is a global one,” he said.
In Australia, GlobalED is trying to tackle this problem with its Australian arm, CreditED. CreditED is an independent online financial literacy program that educates consumers about residential loans.
“CreditED will provide major benefits to both consumers and the finance industry,” CreditED group co-founder and managing director, Brett Bartlett said.
The program involves going through a series of videos, accompanied by multiple choice questions that confirm a borrowers’ understanding of the things that they ‘must know’ and ‘need to consider’ before taking out a mortgage loan.
