“An investment in knowledge pays the best interest”
Benjamin Franklin (1706 – 1790)
In 1758, Benjamin Franklin, a United States’ founding father, wrote one of the earliest publications on financial advice in an essay entitled ‘The Way to Wealth’. Franklin recognised the value of sound financial advice and understood the correlation between education and its significant return on any investment. Over 260 years later, his thoughts resonate just as much, and particularly given the complexity of finance and the uncertainties facing investors.
The topic of financial education can be a troubling one, not least as many of us didn’t receive any at school! Meanwhile, although it was introduced in the UK in 2014 as part of the national curriculum, the numbers still aren’t stacking up.
According to a recent report by the London Institute of Banking and Finance, 69% of young people between 15 and 18 years old in the UK receive most of their financial understanding from parents or their wider family. A further 17% are self-taught and just 8% state that they get the most knowledge from their school studies, despite 64% of the same students stating that they have studied personal finance at school.
The figure is better than the 29% that stated they had access to financial education in 2015, but what is the issue behind the low numbers? There are probably two high-level answers to that. The first is that only 4% are taught financial education as a separate subject. For the majority of students surveyed, the information is ‘only’ being taught as part of PSHE (personal, social, health and economics, although the economic element still isn’t required in statute), maths, economic and citizenship classes.
The second is that students were included that don’t attend state schools and so are much less likely to have access to financial education in school – in fact, 47% say they still don’t have any access. This is because the national curriculum only applies to state schools, and while it is often closely followed by academies, private schools don’t have to follow suit.
It’s not just the UK that seems to be struggling. In the US, of its 50 states, just 19 require students to take courses on economics/financial education, while a separate report published in 2017 stated that only Alabama, Missouri, Tennessee, Utah and Virginia were seen as offering an A-grade approach. Meanwhile in Australia, while lessons in money management have also been in place since 2015, they are only now introducing the concepts of pension planning and taxation, and are (only) aiming for these topics to be taught in 50% of schools by 2024.
What is worrying for me is that although many people cite family and friends as the key people to talk with about their finances, many people still struggle to have any conversations. A recent survey by a high street bank shows this to be the case – in fact money was more of a taboo topic that sex, religion or politics.
So where do you start?
- How much money do you have in your bank account and how much do you really need?
- Given a lot of money sitting in bank accounts typically loses value in real teams due to inflation, what money might you think about investing?
- What long-term dreams do you have for you and your family?
- Have you received or are you likely to receive an inheritance and you want the money to be treated with care?
- When are you planning to retire and what does that retirement look like?
You may relish the thought of spending time researching all of your options and reaching your own decisions. Alternatively, the idea of making these decisions without any assistance might fill you with horror! In this instance, it is worth noting that we have a mature, experienced and knowledgeable team of private bankers, many of whom are qualified at a much higher level than the industry’s minimum requirements. We are confident we have the necessary knowledge and skills, and are ideally placed to assist you in reaching a decision on at least one aspect of your finances and perhaps more.
If you would like to start a conversation – with absolutely no obligation after a conversation or even a meeting – we’d be delighted to hear from you. Simply contact your private banker or our client services team on +44 (0)1624 645000.
We hope you enjoyed this article
Beckie is responsible for developing Nedbank Private Wealth’s international client product and service proposition across wealth planning advice, investments, banking, and online and digital services. She has 30 years’ client-facing experience in the banking industry, both in the UK and the Isle of Man. Prior to her client proposition role, Beckie worked as a senior private banker, responsible for excellent service delivery to a range of private clients. Beckie is a Chartered Fellow of the Chartered Institute for Securities & Investment.