The Garrulous Jay – Education, Education, Education

On the 1st October 1996, at the Labour Party Conference, Tony Blair famously said, “Ask me my three main priorities for Government, and I tell you: education, education and education”.

Twenty-nine years later education was back in the limelight with the publication of the Labour Party’s Financial Inclusion Strategy.

Central to this strategy is the development of financial education. Driven by the observation that “less than half of children and young people are receiving a meaningful financial education at home or school”, there is an ambition, “to ensure that every child leaves school equipped with the knowledge, skills, and behaviours to approach financial matters with confidence”.

These are laudable goals which it is impossible not to support. But they are not new, with some form of financial education already included in both the primary and secondary education syllabi. This suggests that the delivery of the policies that comprise the strategy may be challenging, with the devil as ever lying in the detail.

The variability in financial education is apparent in both the work I do and the way I am asked to carry it out, and I think there are a number of reasons for this.

One may be that, as the policy paper states: “In England, financial education is integrated in schools through mathematics and citizenship studies”. By making two parts of the syllabus responsible for financial education, it is in fact disintegrated, potentially impeding effective delivery.

Worse than this, though, I think an attitude pervades among many people that managing financial matters – a bit like cooking – is something that should be learned at home. I do think parental behaviours and engagement should be integral to a child’s financial education, but herein lies part of the challenge: confidence.

Whether it is parents or teachers, a lack of confidence in their own skills and experience may engender a reluctance on the part of older generations to pass on financial knowledge and understanding to the next. Again, I see this with my own clients.

But this lack of confidence and the growing prevalence of ‘blame culture’ means the investment industry may accentuate the problem…

This week I have completed my training on the ‘Risk Profiling Tool’ SJP will be launching in December. This involves presenting prospective clients with a psychometric questionnaire to establish their attitude to risk towards money and investing.

Tools like this can be incredibly useful as the basis for a conversation about how much risk a client should take with their investments. But I cannot help but think that they are as much a symptom of, as a possible solution to, an absence of good financial education.

Relying too heavily on a tool like this, particularly with clients with limited investment experience or low confidence, could lead to inappropriate recommendations based on ‘uneducated’ answers, driven by a wish to avoid blame for potentially poor outcomes.

So I wish the Government well with its strategy, and hope it delivers the more financially confident and literate generation it seeks to, and from which we would all benefit.