We now really do seem to be heading towards a perfect storm at an alarming rate. The country cannot afford future pension, health and care costs for our ever-increasing older population; individuals themselves cannot afford to retire because of inadequate savings and pensions and yet may be turfed out of their jobs (if they have one) at age 65 without so much as a by-your-leave; the support ratio of working persons to retired persons is declining fast and will put intolerable strain on the future working population; the government’s pension planning is in disarray and no one is prepared to bite the bullet in any shape or form before the next election; and the population at large cannot afford to save, have lost faith in most savings vehicles and lost trust in the organisations providing them, and prefer to spend what they have today and not think too much about the future.
It, therefore, comes not a moment too soon that some attention, albeit lip service, is being given to tackling the wholly inadequate level of financial literacy in the country. Starting at school level must be the correct long term strategy but that will not work its way through to the adult population for many years to come. Something has to be done for today’s adults and the best place to start that is in the workplace.
The Financial Services Authority (FSA) would say that it is already tackling the question of “generic financial advice” but it has a number of shortcomings in its offering. Firstly, to win the confidence of a very cynical populace, its advice and its advisers must be seen to be far more independent and detached than at present; secondly it must be prepared to invest more time in its education process; and thirdly it must recognise that most people are not equipped to work on a menu driven, individual problem solving basis – they really do have to be taken back to square one.
This last point is not intended to be patronising in any way. Whether dealing with the man or woman in the street or large company directors it is almost impossible to overstate the difficulty and lack of understanding people have, even with the basics. Despite knowing that it is important, the subject is riddled with jargon and complexity, and deals with numbers - which many have difficulty with at the best of times. How much easier to say that it is “boring” rather than “I don’t understand”, and put off dealing with the problems. But “understand” people must and sooner rather than later!
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