Financial education won't necessarily make you richer

Financial education won't necessarily make you richer

The Financial Planning Standards Board has warned financial literacy, the education and understanding of money and personal finance, does not guarantee an individual's "financial wellbeing".

The observation was made in response to a draft set of recommendations on financial literacy and education published by the Organisation for Economic Co-operation and Development's International Network on Financial Education.

OECD-INFE’s recommendations called for comprehensive national strategies and an alignment of efforts between governments to support consumer’s financial success and stability.

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The recommendations defined financial literacy as "a combination of financial awareness, knowledge, skills, attitude and behaviours necessary to make sound financial decisions and ultimately achieve individual financial well-being."

Whilst the FPSB largely agreed with the recommendations made by the OECD-INFE, it claimed its definition of financial literacy might be "overstated".

The FPSB proposed other factors also contribute to a person’s financial success, including personal circumstances, behavioural biases and working with a "competent and ethical" financial planning professional.

FPSB is the governing body for the certified financial planning accreditation world-wide, which works to establish financial planning as a "global profession".

The body also urged the OECD-INFE to acknowledge “financial wellbeing” cannot be guaranteed by a good level of financial literacy alone and the importance of promoting access to financial planners must also be considered.  

The FPSB also asked the benefits of "default options and guided decisions" be considered when assessing a person’s financial success.

Noel Maye, chief executive of FPSB, said the body had welcomed the opportunity to collaborate with OECD-INFE to support consumer financial wellbeing.

He said: "As part of its commitment to benefit the public and foster a global profession of financial planning, the FPSB network is active in various national and global financial education and capability programs, including World Financial Planning Day in partnership with IOSCO."