Concerns over financial education

AN EDUCATION technology entrepreneur and financial adviser, Pierre van der Merwe, has seen an urgent need for financial education.

This comes after the Human Sciences Research Council (HSRC) did a study on behalf of the Financial Sector Conduct Authority (FSCA) in 2020, which indicated that 52% of South Africans were financially illiterate.

Another worrying trend is that 46% of adults stated that they prefer to live for today rather than worrying about their future needs, compared with a third (32%) who disagreed with this stance.

Also standing out in the report was that 44% stated that they have not been actively saving.

Over the years, Van der Merwe has witnessed that even highly qualified professionals outside the financial realm often have minimal knowledge of personal finance, let alone all of those who have not had further education or schooling.

He believes that financial literacy needs to start at grassroots level and aimed at the way in which people understand money and its use in their personal lives.

“After doing the research and combined with the Covid-19 lockdown, I started planning how I could reach more and more people and ultimately teach the general public about how important personal finance is.

“It has become my mission to promote financial inclusion and to make the financial services industry and education system more robust,” he said.

Waldo Krugell, an economics professor at North-West University, said financial literacy is key to making financial decisions, and South African research shows that there is a lot of variation in financial literacy across the population.

“I would recommend scaling up, or linking to, or learning from other initiatives like the insurance industry’s financial literacy project, or Money Smart Week South Africa,” he said.

Krugell added that improved literacy does not reduce the responsibility of regulators or change the standards which advisers are held to.

“The financial world is fast changing and complicated and lay people will never be literate enough to, for example, manage their retirement savings all on their own,” he said.

The HSRC said South African consumers generally have limited skills to understand the complexities of the financial sector.

“This renders them vulnerable to predatory lending, financial scams and acquiring inappropriate financial products or services.

“As a result, there is a continued need for comprehensive financial consumer education programmes, complemented with a range of consumer protection measures,” the HSRC said.

SUPPLIED | EDUCATION technology entrepreneur and financial adviser Pierre van der Merwe.