What is financial education?

The OECD Council in June 2005 defined financial education as follows:

Financial education is the process by which consumers / investors

• improve their financial knowledge of financial products and concepts
• acquire, through information, training or advice objective, skills and confidence needed to better understand the risks and opportunities to finance
• make reasoned, informed choices
• know where to find advice and information
• take other initiatives to improve their financial well-being Source: translation of OECD document doc.1431, p.14

Note that, as defined, these objectives are not intended to achieve real financial independence, but seem more designed to encourage (know where to find advice and information) investors to rely on financial institutions. And if the assistance sought does not prove to be informed and objective, well it’s the investor’s problem.
 
The movement toward financial education

In recent years there has been a widespread movement to promote financial education; in Ontario, see Fair Canada for a useful overview, and also see the following on the website of Fair Canada.

The OECD in 2004 established a project to study financial education programs offered in member countries. Since then it has established the International Gateway for Financial Education (IGFE) to promote financial education throughout the world; see also the International Forum for Investor Education .
 
Many countries have established such programs, including:
 
• the United States
• Canada (the federal government ) ; also see a related announcement .
• Ontario for investors and for school children ; see also WealthyBoomer .
• Quebec
• Australia
• England (see also the following )
• France .

Why financial literacy programs for investors?
 
In our view financial education is necessary, not only because education and access to information in general is an essential component of any modern society, but also because it is particularly necessary in the financial sector to help people to protect themselves because of disparities in information and in economic and bargaining power i.e. to protect the weak against the strong. In this, there is little difference between trying to protect consumers and doing the same for investors.
 
In our view, the challenge of education in the financial sector is not only to ensure the availability of information (on the contrary, in many cases there is often an excess of information), it is also to ensure that the content of information made available to beneficiaries of the programs reflects the  inequalities between the parties in the financial sector.