Another worthwhile paper, this time from Saul Schwartz: it is clear to all and sundry bar the government and our regulators! Hat tip Ken Kivenko…
So to summarise, what is my big picture take away from the recent IFIE-IOSCO conference?
I am a big believer in education and in learning. But am I a big believer in investor education per se? Well, it depends on just what you define by investor education and just what is its purpose.
Education and literacy have a place but should not be used to enforce investor responsibility within impaired regulatory frameworks. Recent moves to introduce best interest standards, higher standards of professionalism and the removal of conflicts of interest in international jurisdictions are effectively an acknowledgement of a) the failure of education and disclosure initiatives and b) the limitations of a transaction based system with limited advisor responsibility.
Some interesting perspectives on arguments against Financial Education/Literacy projects:
Another loop back from the recent IFIE IOSCO Investor Education conference. One comment stream that attracted the attention of my pen and paper was the following:
“There will always be asymmetry”…”to give them confidence to ask the questions they need to ask”….”become confident enough to ask questions questions”….”take a pass if they do not get the answer they like”.
Regulators’ views of capital market efficiency are framed on the past, a past where high costs and crude suitability standards did not ostensibly materially impact saving’s ability to fund both consumption and capital investment dynamics. To make the transition we need lower transaction and structural costs and more sophisticated processes. This is a dynamic which will make an impact on savings, asset prices and returns, and possible fundamentally impact consumer confidence.
In an impaired retail advisory market place, regulatory investor education is likely compromised by its mandate to administer confidence in capital markets and by the distance it places between its education and the point of sale.
Unique insight is a perspective gained from a unique position within a universe and openness is a state of mind which allows you to take up new positions. I was very grateful to be invited, as a guest of IIROC, to the IFIE-IOSCO Global Investor Education Conference in Toronto. I found it fascinating, but I did leave with a number of questions and insights that I did not possess at the start.