Year after year, investment in ‘brick’ or the ‘cushion factor’ is giving way to new investment and savings options, as reflected in studies such as the IV EFPA Spain Survey (European Financial Planning Association), which highlights how 80 % of financial advisors consider that the interest of Spaniards in the economy and finance has increased. The professionals consulted give an average grade of 4.75 to the level of financial education, a level that remains very low (only 11% ‘rate’ the level of financial knowledge of Spaniards with a 7 or more).
This report, released during the Financial Education Week, held every October, points out how 25% of clients want to be better informed about the characteristics of the different savings and investment products… and, in any case, it is noted that “62% of the financial advisors consulted consider that young people do not have a better base of financial knowledge than previous generations”, in times of social networks and ‘fake news’.
In the case of VIII Savings Barometer (Inverco Observatory) reveals data that indicates greater awareness-training, as in the case that “23% of savers invest in ESG Funds (compared to 12% in 2021).” A general context in which “87% channel their savings through deposits, followed by Pension Plans (54%) and Investment Funds (40%)”, and in which respondents state that, at the When deciding between a deposit or a fund, “about half would consult with their entity or personal advisor before making any decision.” The data undoubtedly indicates greater confidence in the funds: from 29% in 2015 to 40% in 2023.
«Funds and Pension Plans (points out Eva Valero, member of the Observatory) are two of the products that the highest percentage of savers will contract or where they will channel greater savings in the coming months, in the profiles with less risk aversion such as the most conservatives and in all generations. And he adds: «61% of Spanish savers who invest in funds channel them through some discretionary management portfolio or one advised by professionals. The percentage rises to 68% among ‘Baby Boomers’, but falls to 37% among ‘Centennials’.”
Manuel Alonso, commercial director of the financial consulting firm OVB, highlights, for his part, the importance of financial education “to make informed and responsible decisions, especially to invest in funds. Without a solid foundation of financial education, it is difficult to make wise decisions and correctly manage these investments. And he provides advice in the different phases of the process: «If I want to try to make my money profitable in one or two years and not take on too much risk, I can opt for more conservative funds; If I have a medium-term objective (5-6-7), I could choose mixed investment funds (tranquility of fixed income and profitability of equities). For longer savings horizons (more than 10 years), funds with a higher percentage of variable income are suitable, as they offer the possibility of obtaining higher returns (and in the event of a fall in the markets, I can recover by having a longer term elderly).
To disclose
From the academic field, institutions such as Cunef University have various initiatives, such as the ‘Your finances, your future’ program, promoted by the AEB Foundation and Junior Achievement, as well as their participation in the CNMV’s Financial Education Plan and the Bank of Spain, outreach sessions with students, seminars, the Spanish Institute of Banking and Finance, etc.
Álvaro Remesal, professor in its Department of Finance and Accounting, advises those already initiated that “a rational and reasonable investor must consider diversification in his portfolio as essential. “Excessive exposure to very specific products, a single stock, a single country or asset type, involves unnecessary risk-taking.” And he concludes that, in this new era in which society is better and more educated about the specifications of investment funds: «A good financial education should avoid the influence of fashions or speculative spirals, in many cases based on complex assets. In these cases, investors cease to be investors and become mere lottery players, where losses are almost guaranteed and profits fall to a lucky or advantaged few.
From the AEB itself (Spanish Banking Association) and its foundation, ‘Your finances, your future’ is added to a diverse portfolio of financial education proposals. «The commitment of the banking sector to improving the levels of financial education and digital training (the institution points out) has been evident over the years, with the implementation of training programs and actions of all kinds. But this commitment was decisively reinforced in May 2022 with the launch of the ‘Financial and Digital Classroom’ platform, a web space that collects in an accessible and attractive way more than 400 financial training and digital education initiatives.
‘Financial and Digital Classroom’ therefore contributes to us being better informed to wade through the waters of the complex finances of the 21st century, in which, as AEB highlights, “Financial education should not be limited to providing knowledge, but “which must help manage them for the benefit of people, not only so that they can better manage their finances, but also so that they can obtain the best results, comparing options that are varied and evaluating objectives, autonomously, informed and safely.”
The pending subject
The Inverco Observatory’s own data indicate that 93.3% of financial advisors consider that the most convenient thing to improve the level of financial education in Spain should be distributed in the different educational stages. Common sense that, at least, and compared to previous years, is already being applied in training stages such as Baccalaureate as an optional subject.
As indicated by the recent ‘Funcas 2023 survey on financial culture’, 90% of Spanish families with children in ESO believe it is necessary to increase the weight of school financial education (and 77% widely support the creation of a specific subject on this subject in compulsory education). There is work to be done, as stated in the study: «In the PISA 2022 Report on the financial skills of 15-16 year old students in 20 OECD countries, the results of students in Spain were below average and, What is more discouraging, they worsened compared to the previous Report carried out in 2018.
On the ground, Carol Daunert, CEO of Diverinvest Asesoramiento EAF, focuses on this educational paradox: «It is paradoxical that, from a young age, we learn subjects such as Language or Mathematics in school to be able to function in life, but basic concepts of finances to take care of our savings. Compared to other developed countries, such as the US, Canada or the United Kingdom, where financial culture is much more deeply rooted, in Spain knowledge about investment is very low. As a result, it is common for many people in our country to perceive the financial world as inaccessible and limit themselves to focusing their investments on traditional options such as savings accounts, pension plans or treasury bills. (adequate) information and training must be priced upwards.
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