Tackling poor financial literacy remains a major issue

Improving financial literacy of consumers remains a critical challenge for Australia’s financial services industry, according to Brett Jollie, managing director of Aberdeen Asset Management.

Jollie used his speech at the Financial Services Council (FSC) Annual Conference to urge greater commitment from both industry and government to address this issue.

“While all Australians have a vested interest in maximising their retirement savings to ensure they are able to lead comfortable lives in retirement, most are not empowered with the financial literacy required to understand the dynamics of investing,” Jollie said.

He noted that too many Australians don’t understand superannuation and they don’t understand investment markets.

“Because of this, they’re not engaged, which can lead to them making investment decisions which are not in their best interests,” he added.

Prioritising regular and clear consumer communications and ensuring transparency in investment products and processes are among many ways in which both the industry and government can address consumers’ financial illiteracy, according to Jollie.

But, he argued, the most effective way of dealing with the problem is to introduce financial literacy education into school curricula.

“This will result in more rational investment decision-making, which should ultimately lead to greater long-term wealth for consumers,” he noted.