Task force has a few blind spots [financial literacy]

Posted on March 1, 2010 in Inclusion Debates

Source: — Authors:

TheStar.com – Opinion
Published On Mon Mar 01 2010.  By Carol Goar, Editorial Board

It’s a good thing the government’s Task Force on Financial Literacy is about to embark on a cross-country listening tour.

Judging from the discussion paper it released last week, the 13-member panel could use a couple of months’ exposure to Canadians from all walks of life and socio-economic levels.

Leveraging Excellence provides a clear look at the financial landscape, up-to-date statistics, useful international comparisons and a good roundup of the steps already taken by provincial education ministries, non-profit agencies, securities regulators and banks. It gives credit to those who have taken the lead.

What is missing from the 45-page report is any acknowledgement that Canada’s financial institutions played a role in the losses Canadians suffered in the recession. What is barely mentioned is that 3 million Canadians can’t make astute financial choices; they need every dollar for basic necessities.

This probably reflects Finance Minister’s Jim Flaherty’s choice of panelists. The chair of the task force is Donald Stewart, chief executive officer of Sun Life Financial. Its vice-chair is Jacques Ménard, chairman of BMO Nesbitt Burns. The other 11 members are educators, consultants, financial advisers and journalists. Only one member of the group, Laurie Campbell, executive director of Credit Canada, (also known as the Credit Counselling Service of Toronto), has direct experience with people who struggle to stay one step ahead of the bill collectors, use payday lenders and get ensnared in a web of debt. Her non-profit agency helps them get out.

Some of the statements in Leveraging Excellence come across as insensitive: “The recent economic downturn – and its impact on Canadians’ financial security – has highlighted the need for personal financial savvy.”

Some of the questions in the report suggest a limited understanding of the financial constraints many Canadians face: “What can we do to counteract people’s inclination to live for today instead of planning for tomorrow?”

Some of the assumptions that underlie the analysis aren’t universally shared. Many students, for example, blame high tuition fees, not imprudent borrowing, for their levels of debt. Many pensioners blame bad financial advice, not their own lack of planning or willpower, for the loss of their retirement savings. Many citizens blame the financial institutions for creating such a dizzying array of products that they need professional help to navigate the maze.

It is clear from the tone of the report that its authors don’t mean to be judgmental. They just don’t know much about the Canada in which money management means making the welfare cheque last till the end of the month, debt is the only alternative to eviction, and retirement planning makes no sense because people’s income will go up when they become eligible for Old Age Security.

To his credit, Stewart is open to the views of all Canadians. He has promised to use them in shaping the task force’s final report. “We are really in receive mode at this juncture,” he said as the task force released its discussion paper.

He and his colleagues will split up into sub-groups and visit 15 cities by mid-May. Then they’ll reconvene to pull together what they’ve heard and draft specific recommendations. (They will swing through Toronto twice, on April 19 and May 11. Both hearings will be at the Fairmont Royal York.)

The task force has set a worthy goal. It aims to present Flaherty with a blueprint for a national strategy on financial literacy by year-end.

It has prepared a thoughtful, well-researched consultation paper.

Now all it needs to do is broaden its perspective, rethink a few premises and learn more about life outside its comfort zone.

(More information can be found at www.financialliteracyincanada.com)

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