Should the Government Promote Financial Literacy? Jane Rooney Responds.

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Posted in In The News
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

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What is Financial Literacy?

Today's guest is Jane Rooney, Canada's Financial Literacy Leader.

November is Financial Literacy Month, so we start the show by asking "what is financial literacy?"

Back on show #3 Gail Vaz-Oxlade said:

Financial Literacy is knowing what you need to know in order to build a rock solid financial foundation. But it's not just about the knowing. It's also about the doing. 

Today's guest is Jane Rooney, and her definition of financial literacy is:

Having the knowledge, the skills and the confidence to make responsible financial decisions. 

Combing those defiinitions, financial literacy is:

  • Knowing what you need to know
  • When you need to know it, and
  • Having the confidence to
  • Do what you need to do.

What Role Should the Federal Government Play in Promoting Financial Literacy?

Which brings us to the central question: should the federal government promote financial literacy, or should the private sector or charitable organizations lead the charge?

There are numerous resources already available if you want to learn about money. Every bank, financial planner, credit counsellor, mortgage broker and bankruptcy trustee wants to help you improve your financial literacy skills, and they want to make a buck doing it. And that’s where it gets difficult. How do you know if you are getting good advice, or just a sales pitch?

Jane Rooney was appointed by the federal government to be Canada's Financial Literacy Leader, and as she explained on today's show her role is to take all of the resources that already exist, and bring them together. She is working with all stakeholders, to ensure that all Canadians know where to find the resources they require.  She is also looking for gaps in the resources that exist. She hopes to encourage others to create them, or the government may take a more active role in creating the necessary resources directly.

Ultimately no-one is unbiased, so we conclude that it's up to each individual to do their own research and decide for themselves what resources they require to be fully informed and protected consumers.

Resources Mentioned in the Show

FULL TRANSCRIPT show #9 with Jane Rooney

financial-literacy-canada-transcript

Segment 1

Doug Hoyes: Welcome to our special Financial Literacy broadcast here on Debt Free in 30.  I’m Doug Hoyes.

It’s the month of November, and if you are in the money business you know that in Canada November is Financial Literacy Month.

So why should you care?

Many reasons.  One reason is that Financial Literacy Month is a creation of the federal government, so it can be argued that your tax dollars go towards promoting financial literacy in Canada.  You want to know if your tax dollars are being wisely spent.

Why is the federal government spending your tax dollars on financial literacy?

Good question, so to find out I’ve invited Canada’s Financial Literacy Leader to be on the show to answer that question, and many others.

But first, what is financial literacy?

That’s one of the questions I asked Gail Vaz-Oxlade back on show #3, and here’s what she had to say:

Gail Vaz-Oxlade: Financial literacy is knowing what you need to know in order to build a rock-solid financial foundation. But it’s not just about the knowing, it’s also about the doing. And the big gap we have had so far is that it’s fine to say, yes, I know I should contribute to my RSP but if I’m not actually contributing to my RSP then I’m not getting any further ahead. Yes, I know I shouldn’t be carrying a balance on my credit card but if I’m actually carrying a balance on my credit card then that knowledge component is in direct conflict with the behaviour.

Doug Hoyes: I like Gail’s definition of financial literacy. It’s knowing what you need to know, when you need to know it, and doing it. But how do you learn what you need to know? The problem, as I see it, is that you want unbiased advice and most people are trying to sell you something, so their advice is biased.

If I go to the bank to get advice on an RRSP the bank may recommend that I get an RSP loan to top up my RRSP. That may be very good advice, or not. Is the bank telling me to get an RRSP loan because that’s what I should do, or is it because they’re trying to sell me both a loan and an RRSP? I don’t know.

Who can teach financial literacy in an unbiased manner?

Obviously, Gail is doing her best, but she doesn’t have unlimited resources to maintain a training program for the entire country. It costs money.

So if a single person can’t afford to help the entire country, and if the banks and other big organizations are biased because they’re trying to sell us something, who else can we turn to for help?

Perhaps the answer is the federal government. On the surface, it doesn’t appear that they are biased. They don’t appear to sell loans, or credit cards or any other financial product. Perhaps they should be leading the charge for financial literacy.

As it turns out, they are.

On April 10th, 2014 the Financial Consumer Agency of Canada, an agency of the federal government, appointed a Financial Literacy Leader. Her name is Jane Rooney. So I phoned her up to see what she’s doing.

Jane Rooney:  Jane Rooney speaking. May I help you?

Doug Hoyes: Hi. It’s Doug Hoyes calling. How are you doing today?

Jane Rooney:  Hi there. I’m great. How are you?

Doug Hoyes: I am good. Thank you very much.

Of course, I didn’t just phone her out of the blue. I e-mailed her first and she agreed to talk to me. So I thanked her for taking the time to talk to me and then we started with the basics. My first question to her was “what is her definition of financial literacy?”

Jane Rooney:  The definition of financial literacy that we have adopted was coined by the Task Force on Financial Literacy. And it’s having the knowledge, the skills and the confidence to make responsible financial decisions.

Doug Hoyes: Okay. So that’s pretty straightforward. So your mandate then as the Financial Literacy Leader, so what specifically are you trying to accomplish?

Jane Rooney:  The mandate at my office is to develop a national strategy for strengthening financial literacy of Canadians. And to do that I have a mandate to collaborate and coordinate financial literacy initiatives among all stakeholder groups. So private sector, public sector and the non-profit sector. And, ultimately, what we're trying to accomplish is helping Canadians better manage their money.

Doug Hoyes: So your job is to bring everyone together. So you --

Jane Rooney:  Exactly.

Doug Hoyes: So you listed off a number of different groups there. And I guess my question is there’s all these different groups who are already doing things, you’re going to be kind of the coordinator, you’ve got the big banks, you’ve got financial planners, credit counsellors, obviously, they’re very active, there’s lots of resources available on the internet. So, with all of that activity, why is it necessary for there to be a coordinator like you with the federal government to get involved in promoting financial literacy?

Jane Rooney:  So important to have a focal point for financial literacy so that Canadians can understand where to go to to get information. And it’s an opportunity to coordinate efforts that are already underway because, you’re right, there are lots of great activities that are already underway. But with a coordinated approach, common goals that we’re all trying to improve financial literacy for Canadians, a coordinated effort will improve, we hope, the results of our financial literacy efforts.

So it’s bridging the different groups. So bridging the opportunity is to bring together non-profits with, say, public sector entities, like the federal government, or provincial entities or even private sector. So it’s an opportunity to coordinate efforts, to bring people together to one area to understand what’s available for people to help improve their financial literacy.

Doug Hoyes: So you were appointed … I think it was April of 2014. So we’re about, let’s say, half a year into your appointment. So what bridging, what accomplishments have you had so far, how have you made progress so far in improving the financial literacy for Canadians?

Jane Rooney:  To date, I have appointed fifteen members to a national steering committee. And those are champions from different sectors. So I have fifteen members of non-profit organizations, public sector organizations and private sector entities to help me develop the national strategy. They are to help me champion and undertake activities within their own sectors.

I’ve gone through a fulsome consultation process on helping improve the financial literacy for seniors. So I’ve met with … along with Minister Sorenson, the Minister of State for Finance, and Minister of State Wong for Seniors. We’ve worked through a five-city consultation process and an online consultation. And we will be launching a senior’s strategy to improve financial literacy for seniors in the very near future.

We have re-fielded the Canadian Financial Capability Survey. So in 2009 the largest Financial Capability Survey was first fielded. We have re-fielded it and the results will be available during Financial Literacy Month. I will be releasing them early November. And so we’ll have a very good sense of where Canadians are at in terms of their knowledge and their skills around money matters.

And we’ve also developed a resource database. So, again, it’s to bring Canadians to the resources that are available to help them strengthen their financial literacy. And that database will be fully launched in the month of November, during Financial Literacy Month. So there’s material, there’s tools, information about workshops, from all walks of life. So across provinces, nationally available, workshops that are available in person. So it’s an opportunity for Canadians to learn who’s out there to help them, what information’s available to help them in a one-stop shop resource database.

Doug Hoyes: And that’s really the main thrust of it then is to make sure people know where to go to find those resources. So it’s not necessarily that you are creating the resources. It’s there are resources out there, let’s make sure people can find them. Is that one of the main things?

Jane Rooney:  Exactly. We want to reduce duplication of effort and bring people to what already exists. So it’s not reinventing the wheel, it’s actually pointing people to the resources that already exist.

It’s also an opportunity to identify are there gaps, is there anything that’s missing out there? And then we at the FCAC could identify whether or not we’re the best place to fill the gap with a new product or whether there are others out there that are best placed to fill that gap.

Doug Hoyes: That’s the first part of my conversation with Jane Rooney, Canada’s Financial Literacy Leader. After the break, you’ll hear her answers to more questions, including her view on the main financial literacy issues we face. And I also ask her to summarize her accomplishments since being appointed Financial Literacy Leader about six months ago. Those questions and more after the break. You’re listening to Debt Free in 30.

Announcer:                 You’re listening to Debt Free in 30. Here’s your host, Doug Hoyes.

Doug Hoyes: Before the break I asked Jane Rooney, Canada’s Financial Literacy Leader, to explain why, with all of the resources out there, she thought it was necessary for the federal government to get involved in financial literacy. She explained that there are lots of resources but there is no focal point to bring all of those resources together, and one of her jobs is to determine if there are any gaps in the financial literacy resources available to Canadians. So I asked her to tell me what gaps she sees and to give her view on what she sees as the main financial literacy issues in Canada. Here’s her answer.

Jane Rooney:  So I mentioned a survey that was conducted. And the results were described in five different areas. So people are having trouble planning ahead. That means planning ahead for short-term goals, savings goals and long-term goals like planning for retirement.

People are having trouble keeping track of their money, so that means basic budgeting skills, knowing what their income is, knowing what their expenses is and how much is left over.

We know that people are having trouble staying informed about financial products and services. As you know, it’s a very complex financial marketplace, and more and more new products and new ways of accessing products is coming out, like mobile. So it’s important for us to know and that things are being done to help improve people staying informed.

The other two areas that were evaluated were choosing products. And the choosing products … people, once they know what’s available, are finding products that suit their needs. But, again, the definition of financial literacy, it’s so important for people to know what are the products and services, what are their rights and responsibilities, what questions should they ask so that they are choosing a product that best suits their needs.

And then, as a final area that they’re looking at in terms of improvement, is around … sorry, I’m forgetting the last one. But all that to say is this first three, planning ahead, staying informed and keeping track of money are the key areas that we know people need help with. And so my focus is what products are already out there and connecting Canadians with those products so that they can improve those skills.

Doug Hoyes: Gotcha. And I think getting people to ask questions is probably the most important of all those things you listed off. If we would all take a step back and ask questions before we signed on the dotted line, we would probably be in a lot better shape.

So your group is in the process, you said, of drafting a national strategy for financial literacy. And I’ll put a link in the show notes to the material on your website that talks about what you’ve addressed.

So the first phase you mentioned is with respect to seniors, strengthening financial literacy for seniors. And I’m curious, so why did you start with seniors? I’m sitting here thinking, well, I guess the people we need to talk to are the young people because they’ve got their whole lives ahead of them. Why did you start with the focus on seniors? Are there some issues that are unique to them? Why seniors?

Jane Rooney:  Yes. So the first phase of the consultation was around seniors. And there are two other phases. One is around priority groups, so helping low income, Aboriginal, newcomers to Canada, people with disabilities, help strengthen their financial literacy. Phase three is about youth and adults.

And all those phases of consultations will be done this year. And all of that information will be fed into a national strategy on financial literacy. So it’ll be a national strategy for all Canadians that’s inclusive, it’s relevant and it’s accessible to Canadians. So it’ll be across the lifespan, how can we help people.

Now, why did we start with seniors, key information … seniors were found in the Financial Capability Survey as having a higher need. They answered the questions with less confidence than other segments of the population.

There’s also recent statistics that show seniors and near seniors are higher levels of debt as they enter their senior years. But also higher levels of bankruptcy rate. So there’s a key concern there. And with a growing population in near seniors and current seniors, really important to tackle that audience.

It’s also important to note that the Financial Consumer Agency of Canada was actually given funding for youth, developed a financial literacy program for youth back in 2007. So we actually tackled, at the agency, information for youth and developed a program called The City: A Financial Life Skills Resource. And we worked very closely with provinces and territories across Canada to integrate financial education into the school curriculum.

So youth continues to be a key focus and you will see youth reflected in the national strategy. It’s important to start young and it’s important to repeat that information all throughout one’s life course.

Doug Hoyes: Yeah, and you’re absolutely right with the seniors, they do have the highest level of debt because they’ve been around long enough to accumulate it. It’s, kind of hard for an eighteen-year-old to have mortgages, and car loans and lots of credit cards and everything. And I think you’re right, they as a result become more susceptible to bankruptcy and other factors when they get downsized or have other issues.

So what’s next then? You talked about drafting the national strategy. So what’s the timeline on having that completed and what do you see as the next steps?

Jane Rooney:  Well, very exciting times. We’re actually going to be launching our phase two consultations. So that’s consultations around the priority groups, low-income Canadians, Aboriginal Canadians, newcomers to Canada, people with disabilities. So what are the unique challenges that those people face that we can address in the national strategy. Those consultations will be launched shortly. And the online consultation paper is open until December 10th for comment.

We’re also going to be launching consultations during the month of November, Financial Literacy Month, around children, youth and adults. So, again, it’s an opportunity for all Canadians and stakeholder groups, people who work with Canadians, to have their say about what are the unique challenges that these groups face and how best can we reach those groups with key information, at teachable moments, through what types of activities.

The phase three consultation paper will be available until December 31st for comment. Once we’ve analyzed all the input that we’ve received, the final version, a national strategy for all Canadians will be launched in 2015.

Doug Hoyes: Gotcha. So the seniors was the first consultation and the consultation phase is closed. And the results of that phase are going to be released in November; is that what you said?

Jane Rooney:  We’re going to be releasing the national … sorry, seniors strategy, very shortly, actually.

Doug Hoyes: Very shortly, okay.

Jane Rooney:  That was as a result of Economic Action Plan 2013 where the government put a priority on developing a strategy for seniors, improving their financial literacy. And we will deliver on that very shortly. And it’ll be publicly available, the seniors strategy, on FCAC’s website.

Doug Hoyes: Okay, good. And what I’ll do in the show notes is I’ll put all the links to the website. And it’s very well laid out. You’ve got all the different segments there. So that should make it easier for people to follow along. So I appreciate you joining me. Is there anything else you would like to add that we haven’t covered, anything else in conclusion?

Jane Rooney:  Sure. I’d like to say I’m honoured to have been named Canada’s first Financial Literacy Leader. And I’m really pleased and proud that the Government of Canada has made such a commitment to financial literacy. And by having a focused office for financial literacy, I hope Canadians will be able to find the resources to help them improve their skills.

And, finally, Financial Literacy Month is the month of November. There are lots of activities that are happening. So I would invite people to come to FCAC’s website, look at the calendar of events, find out if there’s an activity or an event happening in a community near you that you might want to be involved in.

Doug Hoyes: That’s my conversation with Jane Rooney, Canada’s Financial Literacy Leader. I’ll be back after the break to wrap up the show. You’re listening to Debt Free in 30.

Segment 3

You’re listening to Debt Free in 30. Here’s your host, Doug Hoyes

30 Second Recap

Welcome back. It’s time for the 30 second recap of what we discussed today.

My guest today was Jane Rooney, Canada’s Financial Literacy Leader. Ms. Rooney gave her definition of financial literacy, discussed her mandate, and described her accomplishments during the first six months of her tenure, and laid out the plan for drafting a National Strategy for Financial Literacy for Canada.

She agreed that there are lots of groups involved in financial literacy, and lots of resources available. She sees her job as a facilitator, bringing together the different groups, and identifying gaps in the resources available and working to fill those gaps. She is working towards a National Strategy on Financial Literacy, and is consulting with Canadians with a goal to have the strategy ready to go in 2015.

That’s the 30 second recap of what we discussed today.

Should The Federal Government Promote Financial Literacy?

So what’s my take on this? We covered a lot of topics today, and I don’t have time to comment on every topic, so I’ll pick the most controversial area, and that is “should the federal government be involved in promoting financial literacy?”

That’s a difficult question.

As I said during the show, there are lots of resources out there. Every bank, financial planner, credit counsellor, mortgage broker and bankruptcy trustee wants to help you improve your financial literacy, and they want to make a buck doing it. And that’s the difficult issue. How do you know if you are getting good advice, or just a sales pitch?

That’s why there may be a role for the federal government.

I’m a taxpayer, so I don’t want my tax dollars spent on anything unnecessary, but since the government has many partners in this endeavour, and those partners are helping with the funding, it may be a positive step to have the government co-ordinating the efforts of the private and not for profit sector.

Or not. It’s too early to tell.

Perhaps the government is also biased. The National Conference on Financial Literacy, to be held on November 6 and 7 in Vancouver, is sponsored by Visa and all of the big banks. If you are getting funding from the big banks, are you unbiased?

See what I mean about this being a difficult issue? I don’t want the government using my tax dollars, but I also worry about the big banks funding the exercise, so it would appear to be a no win situation. Or not. It may work out great. Jane Rooney is obviously very passionate about this project, and I’m sure she will do everything in her power to advance the cause of financial literacy in Canada, and that’s a very noble objective.

I’ll keep a close eye on this, and if there are any significant developments I’ll report back on future episodes.

I’m interested in your thoughts, so feel free to post your comments on our website at hoyes.com, that’s h-o-y-e-s.com, where you can also find full show notes, transcripts, and links to everything we talked about on the show.

To get this show automatically every Saturday morning, please subscribe on iTunes or any other podcasting service.

Thanks for listening.

Until next week, I’m Doug Hoyes, that was Debt Free in 30.

Bonus Segment

Doug Hoyes:  As is often the case on these shows I run out of time on the radio only portion of the show, so for our podcast listeners I’d like to do a more complete wrap up of what we discussed.

First, I think we had two very good definitions of financial literacy today.

I started with Gail Vaz-Oxlade’s definition:

Gail Vax-Oxlade:  Well, financial literacy is knowing what you need to know in order to build a rock solid financial foundation. But it’s not just about the knowing, it’s also about the doing.

So Gail’s definition is about both know and doing.

Here’s Jane Rooney’s definition:

Jane Rooney:  Having the knowledge, the skills and the confidence to make responsible financial decisions.

Jane’s definition includes the word “confidence”, and I like that word.  When you are sitting at a car dealership or the bank haggling over the interest rate on your car loan, you need the confidence to be able to stand your ground and walk away if you aren’t getting a good deal.

If I had to make up a definition of financial literacy I’d combine the best of both of those definitions and say financial literacy is

  • Knowing what you need to know
  • When you need to know it and
  • Having the confidence to
  • Do what you need to do.

It’s a combination of timely skills, confidence, and actually getting it done.

I asked Gail what her solution was, and she said she created a website to help people.  Here’s what she said:

Gail Vaz-Oxlade:  I created a website called mymoneymychoices.com, because there was nowhere, anywhere [laughs], anywhere on the internet, nowhere in a financial institution, nobody had a plan. Everybody was talking about financial literacy and there was a huge debate about what should be included in financial literacy, but nobody was willing to step up and give a plan. And so what I did was I created the roadmap, and the roadmap starts at step one – you can’t get to step two until you do step one. You do step one, then you do step two, and so on, all the way through to the end. The idea being that you actually have to take the steps to make your financial foundation firm if you want to be considered financially literate.

Doug Hoyes: So this is a money making thing for you. What’s the cost of this?

Gail Vax-Oxlade:  There is no money to be made off this. There is no cost. I know –

Doug Hoyes: [Laughs]. What, are you nuts there, Gail? I mean come on.

Gail Vax-Oxlade:  That’s what everybody says. Everybody says so how are you monetizing this, Gail? And I’m not monetizing it. In fact, this has cost me probably about $20,000 of my own money so far in order to put this program in place in terms of coming up with the structure and paying someone to build the website and purchasing the pictures that go on the website and all that other stuff. I am not interested in monetizing this. What I am trying to do is get Canadians – because I can’t be everywhere, Doug.

Doug Hoyes: [Laughs]

Gail Vax-Oxlade:  And this is the thing, is that everybody wants me. And so what this does is this tells you exactly what I would tell you to do if I showed up at your door. If I showed up at your door the first thing I would make you do is do a spending analysis. So the first step in the My Money My Choices Program is to do a spending analysis. I’d make you make a budget, I’d make you make a debt repayment plan.

The nice thing about the programme is it’s structured in such a way that it’s a learn one teach one system. So when I do my spending analysis, not only do I move to the next activity but then it becomes incumbent on me to find somebody to teach to do a spending analysis. And that’s how I hope the program will spread across Canada. I’m just about to implement a fundraising campaign to get some money to do some advertising, because I think that’s an important step. And I have only so many resources to commit to this, so that will be my next step.

Doug Hoyes:  And since we recorded that interview Gail has started a fund raising campaign; I’ll put a link in the show notes if you want to contribute.

But again I come back to my earlier point: who can teach financial literacy in an unbiased manner?

Obviously Gail is doing her best, but she doesn’t have unlimited resources to maintain a training program for the entire country.  It costs money.

So if a single person can’t help the entire country, and if the banks and other big organizations are biased, because they are trying to sell us something, who else can we turn to for help?

That’s where Jane Rooney and the federal government can play a role, but as I said earlier, even the government receives funding from the big banks, so even they could be subject to some bias.

O what’s my solution?

I think the answer is obvious.

You have to be the boss.  You have to take care of yourself.

You should use all of the resources available to learn everything you can about money management.

Join Gail’s my money my choices group.

Go the government’s website and review all of their resources.

Go to my websites and read all of the free material.

Ask questions.

Do more research.

Whenever you are getting advice, ask yourself “what are they trying to sell me?”  By asking the tough questions, you can get answers, and you can make an informed decision.

It’s not easy, but that’s my ultimate solution to improving financial literacy in Canada.

We must take responsibility for ourselves.  That’s the solution.

That’s our special financial literacy show for today.

Please subscribe on iTunes, and leave a review because that helps the show, and whether you agree or disagree please leave your comments on the show notes on hoyes.com.

Thanks for listening.

Until next week, that was Debt Free in 30.

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