Financial Capability in Canada Presentation to the CFED 2006 Assets Conference, Phoenix, AZ Jennifer Robson, Director of Research and Policy, SEDI

2 1. Who is ? National charitable organization Dedicated to creating innovative strategies enabling poor, unemployed and underemployed Canadians to become self-sufficient Primary area of activity in social policy innovation – linking policy and community

3 2. What is financial capability? An enabling environment for financial capability would ensure that all Canadians “develop the skills and confidence to be aware of financial opportunities, to know where to go for help, to make informed choices, and to take effective action to improve their financial well-being”.

4 For whom is it important? All citizens, BUT some at greater disadvantage either through vulnerability to financial difficulty or barriers to accessing existing sources of information, education and advice –Persons in low-income –Persons with disabilities –Youth –Seniors –New immigrants –Persons in rural or remote communities –Aboriginal Canadians  Those with few financial resources if any but no immediate crisis needs –Less able to purchase services in private market –Less motivated to proactively engage in learning

5 3. Demand Side Literacy / Numeracy 42% of Canadians do not have the basic literacy and life skills to cope with the demands of our knowledge society and economy Confidence and Knowledge Estimates that 34% of population needs help learning to make best financial decisions, another 23% needs help following steps for safe financial decisions, and another 20% needs most basic help to avoid pitfalls (Investor Education Fund estimates)

6 Demand Side Financial behavior Alternative financial service providers are estimated to have served between 1 and 1.4 million Canadians at least once in the last three years (2000), market growing annually Estimates of un-banked range from 3% of general population to 60% of social assistance recipients Rising consumer spending/debt/bankruptcy, falling personal savings Low participation in certain public income and savings programs (e.g. CESG, GIS) Increase in fraud/identity theft, etc..

7 Supply Side Supply and Delivery 2006 environmental scan of supply of financial information, education and advice in Canada July, 2006: n=113 organizations; 164 products, 99 services Pocket of concentration: 45 highly active organizations Methodological challenges; over-representation of voluntary sector and under-reporting by private sector; lack of information on inputs (e.g. production costs) and outputs (e.g. annual clients served)

8 Supply Side Products Predominance of on-line delivery -- portals, websites, documents for download or electronic ordering (62%) Focus on passive information transmission (50%) Focus on general population (56%) high income (32%), middle-income and middle-wealth ( %), youth yrs (26%) Focus on certain financial topics –Credit/ debt (54%) –Consumption (52%) –Saving (51%) –Budget/ money management (48%) –Financial planning (47%)

9 Supply Side Services Most (49%) small group format (artifact of sample?) Most (46%) multipurpose (information, education and advice) but little available in advice alone Greater targeting to specific groups; low-income (41%), public assistance recipients (21%), low wealth (21%), youth yrs (16%) Focus on certain financial topics –Saving (77%) –Budget/ money management (76%) –Credit/debt (72%) –Consumption (59%) –Consumer rights and redress (54%)

10 4. Looking ahead - Research Work underway to develop a national baseline survey. Work recently completed to survey practitioners International scan (focus on US and UK) Work underway to focus on vulnerable consumers Potential for pilots

11 Looking ahead - Practice Overlap with providers of basic literacy and basic skills Promising models: –FAPS (St. Christopher House, Toronto) –Money Management Training (SEED Winnipeg) –FCAC

12 Looking ahead – Policy Integrating financial capability into government programming: –Pilot of integration in provincial social assistance programming (LEAP, self-employment) –Legislated requirement of Canada Learning Bond and enhanced Canada Education Savings Grant Consultation and collaboration between sectors – National Steering Committee

13 Social and Enterprise Development Innovations 1110 Finch Avenue West, Suite 406 Toronto, Ontario M3J 2T2 Phone: Fax: