Pushing the envelope on financial education

Managing director at Canadian Securities Institute discusses efforts to enlighten Canadians and train up industry professionals

Pushing the envelope on financial education

Every November, the Canadian Securities Institute (CSI) makes it a point to put out a series of educational workshops for advisors in observance of Financial Literacy Month. But this time around, the institute has pivoted slightly and is focusing on a different crowd.

“We’ve mostly focused on advisors and talked about the advice they’re giving on financial planning,” said Marie Muldowney, managing director at the CSI. “This year, we decided to take more of a public stance by offering information directly to all Canadians.”

The decision, as Muldowney explained it, came after the institute launched a program earlier this year oriented toward promoting financial health for seniors. While that effort was primarily directed toward advisors, they realized much of its content would also resonate with the retail market. That prompted them to organize more public-focused webinars, partnering with advisors willing to share their knowledge as subject-matter experts.

To be sure, the majority of Canadians aren’t starved for information on personal finance online, especially during Financial Literacy Month. But the CSI hopes to provide education on the most pressing money problems with three free webinars: Managing Money and Debt Wisely, which happened on November 4; Planning and Saving for the Future, held earlier this week; and Preventing and Protecting Against Fraud and Financial Abuse, scheduled on November 24.

“We know that Canadians are in debt. That's a burden when you have a pandemic. It’s more important than ever for people to think about their spending and saving habits, especially with respect to building an emergency fund,” Muldowney said. “Then we talk about life goals through different phases like raising a family and retirement planning. These life events require a bit of thinking and support through habits like budgeting and planning, which don’t come naturally to a lot of people.”

As if the path to financial freedom wasn’t precarious enough, everyday Canadians – especially vulnerable groups like seniors – also have to contend with the ever-present scourge of fraud. The 21st-century scammer’s toolbox is more diverse than ever, with modes of attack unsuspecting victims won’t suspect until it’s too late. Aside from identity theft, fraudsters can direct emails and phone calls at elderly people who may not be on guard. Overly trusting individuals can fall prey to social engineering and romance scams, giving away sensitive information or huge sums and potentially wind up destitute as their wealth is siphoned away through untraceable means.

The failure to plan and safely achieve one’s financial goals has grave economic implications. As Muldowney noted, the population of Canadians approaching retirement is growing, and the percentage of people who survive past 90 is vastly larger today compared to what was possible in the 1960s. Women are particularly vulnerable, as they face the harsh but real possibility that they’ll outlive their husbands; even if they are left with large fortunes, there’s still the open question of whether they have all the tools to manage it.

“That’s why we’re encouraging people to think about their finances the way they might about travel,” Muldowney said. “If you’re going someplace, you have to consider how you’re going to get there, where you’ll stay, what places you’ll visit, whether you’ll see relatives, and how to stay safe. Naturally, you plan in a lot of detail. That’s the kind of preparation we want to foster: if you’re retiring, and you’re going to be in retirement for 10, 20, 30, 40 years … have you thought about it?”

Still, planning for a trip is a whole different proposition compared to preparing a long-term financial plan. While exploring travel websites and checking out hotels online provides visual and visceral pleasure, the idea of looking at prospectuses, having to calculate the time value of money, and trying to calculate how much wealth you’ll need in retirement is an intimidating exercise that’s beyond the capabilities of the vast majority of Canadians. The logical upshot, Muldowney said, is that they’ll need a financial professional to help guide their decisions.

“If you look for the right qualifications, you can find someone who can actually help you through the process,” she said. “There's no doubt that people could be helped by a financial advisor.”

On the advisors’ side, the COVID-19 pandemic has also reinforced the need for education, particularly with respect to alternative investments. Aside from widespread declines in earned income, reduced job security, and increased reliance on government benefits, many investors are finding their portfolios decimated during the COVID-19-induced meltdown in financial markets during the first quarter; those who sold out of panic were worse off, as they were unable to participate in the subsequent recovery the following quarter.

“The meltdown that occurred earlier this year reinforced the importance of diversification,” Muldowney said. “Hedge funds and liquid alternatives, which are   two popular types of investment structures within alternative strategies, generally performed well during the market upheaval earlier this year.”

Given their potential to enhance traditional portfolios with lower risk and even provide a risk-adjusted return – something that’s harder to come by given the low-interest-rate environment – she said the institute has definitely seen a greater interest among advisors to learn more about them. That’s translated into more appetite for CSI courses related to alternative investments, particularly those on hedge funds and liquid alternatives. More recently, she said the institute just launched a course on bitcoin, and is in the process of introducing content covering private equity.

“We saw a trend building up around liquid alternatives last year, and we realized that people who are selling investment products needed the knowledge – including KYC and KYP considerations – to sell those more sophisticated strategies,” Muldowney said. “We always have an eye on what’s happening in the American market, as well as what’s trending globally. As soon as we see an opportunity, we put together a course to ensure that people dealing in investment funds and securities are properly trained.”


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