Financial education, a strategic priority at national and European level
Bucharest, November 25, 2020 - Improving the degree of financial education has become a fundamental mission, of strategic importance in Romania, both for authorities, companies and academia, being an essential pillar for the development of financial markets. This was the conclusion of the ISF2020 International Conference "New generations of consumers of financial services - how we train them, how we educate them", organized by the Institute of Financial Studies (ISF), on November 24, 2020.
The event, which was broadcast online, was attended by top representatives of the Financial Supervisory Authority, the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the Organization for Economic Cooperation and Development (OECD). The conference was also attended by representatives of academia and entities operating in the non-bank financial market.
The central topic of the conference generated debates full of content and also brought to the attention of the public the importance of financial education for the future of new generations, especially in the context in which Romania is currently among the last positions in this field.
The President of the Financial Supervisory Authority, Mr. Nicu Marcu, pointed out in his opening speech that financial education is one of the fundamental directions of action of the Authority, which invites, at the same time, social and individual responsibility for risk and benefits. "What we propose is that through financial education we ensure a correct understanding of how the non-bank financial market works, the tools and services we use, as consumers," said Mr. Nicu Marcu.
Beyond the role of financial services consumer accountability, financial education is also an effective means of protecting their rights and legitimate interests. The capital market investor, the participant in the pension system, the insured, who have a high degree of financial knowledge, are much less likely to make a decision that will affect their budget or that will harm their rights or interests.
"Investor education is an increasingly discussed topic. You might be wondering why ESMA is so interested in such a topic as investor education? First of all, naturally, we have had and continue to have a strong interest in investor protection. Its protection is a precondition for strong and stable financial markets. We need to build and maintain investor confidence in capital markets, otherwise there will be no desire to invest, and this will ultimately have negative consequences for the financial services industry, but especially for economies as a whole. " , said Ms Verena Ross, Executive Director at the European Securities and Markets Authority.
On the other hand, Mr Timothy Shakesby, Coordinator of the Conduct and Supervision Directorate at EIOPA, emphasized the extremely important role of financial education in this period when the whole picture of financial markets is affected by the COVID-19 pandemic.
"Financial decision-making depends on existing financial education, especially in a pandemic situation, a new context to which both the supply and demand for financial services are adapting," said Timothy Shakesby.
In his turn, the Vice President of the Financial Supervision Authority, Mr. Dan Armeanu, explained that at the microeconomic level, the low level of financial education has negative long-term effects in economic and social terms, which can, moreover, be accentuated. "This pandemic crisis has practically caused a high degree of unpredictability of the economic and financial environment worldwide and has led to changes in various markets, such as the labor market, a context in which people are forced to make unforeseen financial decisions. they can affect the standard of living ", said Mr. Dan Armeanu.
Also in the context of the global health and economic crisis, Flore-Anne Messy, Coordinator of the OECD's Division of Insurance, Private Pensions and Financial Markets, emphasized the importance of protecting vulnerable groups through financial education to overcome the situation. generated by the COVID-19 pandemic.
"Based on the recent study on the level of financial education of adults, presented by the OECD in June 2020, the low level of financial adjustment registered especially in the countries of Eastern and South-Eastern Europe emerged. If before the pandemic the percentage of those who managed to save actively was about 50%, after these months, the level fell to 25% of the total population. There is clearly a direct relationship between the level of financial resilience and the level of financial education ", said Mrs. Messy.
Participants in the ISF conference stressed that financial education must play an important role in the education system of the next generation, which has totally different financial behaviors from previous ones.
According to the presentation by the OECD representative, the new generations have less knowledge and financial behavior compared to the rest of the population - they save less, do not have a budget plan, risking a high level of financial stress in the long run due to negligence in their decisions financial. "That's why young people - the 15-24 age group - have been most affected by the risk of unemployment and any reduction in income has significantly affected them in these pandemic months, with no financial support saved," Ms Messy said.
The same concern for the new generations was shown by Mrs. Verena Ross, who stated that the “millennials”, who have recently reached maturity, approach investment decisions differently from their predecessors. "While past generations have traditionally collaborated with banks or other financial advisers by visiting the counters, so face to face, which involves a number of limitations, young people - many of them entrepreneurs - are increasingly getting their information from the Internet and I use online service providers ", mentioned the Executive Director at ESMA.
In turn, Mr. Nicu Marcu said that the A.S.F. through its specific financial education programs it has addressed all age groups, but has focused mainly on young people. The President of the A.S.F. shared the experience of university professor and mentioned that Romania has a young digitalized generation, with a high appetite for information and extremely connected to reality, and digital technologies can become the means to improve the efficiency and results of financial education, provided that the way of learning is interactive and enjoyable, more precisely to respond to the concerns of young people.
"In this regard, we are on a long road - we know that the results can be seen in time and, therefore, we must be prepared for a sustained and lasting effort. As I said, over the last five years we have seen improving the level of financial education at the national level as one of our priorities. As I think you already know, we have a lot of programs that we develop in collaboration with high schools and universities across the country. The numbers are motivating - our actions for pre-university education have benefited over 150,000 students, we have developed training programs for over 2,000 teachers and volunteer lecturers for schools and high schools, over 12,000 students from universities across the country attended the conferences, the seminars and open lessons that we thought especially for them ", also declared the President of ASF.
Financial inclusion was another aspect of the financial education process, which was discussed at the ISF Conference. Mr. Valentin Ionescu, Director of the Strategy and Financial Stability Department within the A.S.F. and, at the same time, the President of ISF, pointed out that financial education must focus on main objectives that can be implemented in different strategic directions of action, starting both from the need to increase the level of consumer protection and from the need to improve the level of financial capability; of the degree of financial inclusion. He added that financial inclusion is the concept by which individuals and businesses have access to useful and affordable financial products and services that meet their needs.
The ISF2020 International Conference "New generations of consumers of financial services - how we train them, how we educate them" - 6th edition - was an extremely useful discussion platform, through which a series of principles and ideas were launched , which will be the real bridgeheads for future financial education debate events.
This year's event was supported by NN Life Insurance and Erste Asset Management. UNSAR supported this event as a Special Partner. The event benefited from the support of Profit.ro as a Media Partner and the support of Xprimm Publications.