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Views on Financial Education :Why? What? How?

www.globalequity.org

Emma Dawson, Copperfield Communication LLPVéronique Japp, BNP Paribas Securities Services19 June 2008

G Smith

France

Germany

Greece

Ireland

Italy

Portugal

Spain

Holland

Austria

Czech Republic

National Austrian Insurance Association orAssociations & Consumer Protection Agencies

« Financial Driver ’s Licence »

« Get to know your money » National Ministry of Finance National FinEd

Strategy Fall07 & Students Programme in 09

Not for profit associations /Government/Private Organisations

« La Finance Pour Tous »

Denmark

Estonia

Financial Education in Europe

Consob Promotore Finanziario « Learn to Invest »

Government Programme : « Money &Pension Panel »

Government/FS Authority Programmes :« Financial Literacy for Small Businesses »,« My Money » (Consumer Protection)

Government & Private Sector Programmes(vey much targeted at childrens & schools)

« Old age provision goes to school »

Government and regulator’s initiative« centiQ »

Consumer guides on Insurance and Pensionproducts (Insurance Supervisory Authority )

Private sector programmes : « Learn tomanage your money » being one of many

Mostly approached as ConsumerProtection matter

« Economy : Knowledge with value »

« It’s your money » (Irish regulator)

• Only common denominator is that governments, where researchhas been conducted, and transnational bodies (OECD, EU) havefound that there was generally a low level of financial capabilityamongst the population

• Two categories of countries :

• Those where historically the state and the employers havehad a providencial role in influencing behavioural economics

• Those where the individuals have been more, or for longer so,in charge of their financial decisions

• First group : a rather extensive range of financial educationinitiatives, in the larger sense, less so in the work place or indifferent forms

• Secong group : a stronger focus on developping efficient,targeted tools with extensive content

Financial Education in Europe

G Smith

• The OECD found only one initiative in the workplacewhich comes from the UK

• Overall finding is that the countries with the highestnumber of initiatives are the UK, Netherlands,Germany, Austria & France

• Primary targets are children & yound adults

Financial Education in Europe

Financial Education in the workplace

Different countries, different needs, different goals

Different tones & languages

Corporate cultures

Political agendas

Top employee reasons for not joiningshare plans…Following a survey of employees at Orange in the UK,the following were highlighted as the main reasons fornot joining share plans:

• Didn’t think they would make any money

• Lack of cash to invest – other priorities for spending

• Misperception of risk levels involved

• Misperception of investment commitment

• Fear element surrounding shares and markets

• Didn’t understand how the schemes worked

Identify the problem

Asked about communications...

The same survey revealed some interesting perceptionsof the employees views on share plan communications

• Info was sent out very close to cut off date so didn’t havetime to make a decision

• Too much information to absorb at the same time

• Directed at people with good financial knowledge

• Too much financial jargon

• Lack of follow on support

• Over-reliance on extensive printed materials

Identify the problem

must be conceived, developed anddelivered within the context of anemployee financial educationprogramme

• Employees can make informeddecisions based on an holistic view oftheir financial situation

• Employers realise the full benefits oftheir investment in share plans

Effective share plan communications

Identify the problem

Communicating in Context

Financial EducationLinking personal financial health with total reward- life stagesand forward planning.

Business EducationLinking personal financial health with overall businessperformance indicated by share price.

Share Plan CommunicationsMessage learning framework:

SourceMessageAudienceChannels

Project Management

Establish the Business Case

The Business Case

Proven, measurable, and widely accepted:

• Increase ROI on benefits: improve employee acquisition,retention and motivation by improving employee understandingof the full range of benefits offered by the company.

• Improve productivity: AXA found 3.8m people take time of workin the UK each year though money worries. Professor Garmanof Virginia Tech estimates the cost of financial worries tobusiness as between $450 and $2,100 per annum.

• Risk management: financial education protects against the riskof legal action being taken by employees on the grounds ofpoorly informed decisions made on their benefits.

• Soft benefits

10 Establish the Business Case

Why is it not happening?

• Fear of straying from education into advice; how do youdifferentiate?

• Companies often don’t have the skill sets in house that arerequired to produce financial education programmes

• Unclear objectives; what is the programme trying to achieve?

• Delivery; who’s job is it to provide the programme?

• Cost/benefit questions

• Scalability – how do you provide equal access to all employees?

• Lack of tangible examples to be considered, reviewed andcompared

11 Identify the barriers

One solution…

• Online

• Interactive

• Fun and engaging

• Multiple media formats

• Monthly issues – drip feedinformation

• Caters for all levels offinancial sophistication

• Content strategy andplanned curriculum ensurefocus on education andavoid advice

Topical content…

•Debt Management•Pensions•Share Plans•Student Loans•Credit Cards•Mortgages•Saving & Investing•Insurance•Retirement Planning•Tax Credits•Performance•Annual Report &Accounts

Content Strategy

…made relevant…

•Graduate•New Joiner•Home Buyer•New Family•Planning for the Future•Pre/retirement•Redundancy•Annual Bonus•Share Planlaunch/maturity•Tax time

Content Strategy

…and engaging.

•Special Report•The Adventures of FinancialED•The Exploratory•Listen In•DIY•Devils in the Detail•FSA Seminar Series•Company bespoke

Content Strategy

Lessons learned

• Specify policy: education vs. advice

• Agree a business case: productivity, benefits, liability

• Establish a baseline: survey and focus groups

• Specify objectives: specify learning points

• Be creative: it can be pretty boring stuff!

• Plan well ahead: establish a curriculum

• Avoid info overload: learning occurs over time