Financial Education – is it just an excuse?

 One of the most amazing things about an iPhone (or an iPod for that matter) is that it really doesn’t need instructions. Within a few moments of opening the box you can be up and running – it really is intuitive. They are beautifully designed and engineered products that work brilliantly.

Contrast this with financial services. Most financial services products come with pages of terms and conditions, exclusives, caveats and small print. For example the policy document for Aviva’s travel insurance (which can cost as little as £12) is 56 pages long and is littered with exclusions. There are 14 exclusions to the baggage cover alone, the last of which actually just refers you to another page of “general exclusions”. In fact financial services product design often seems clunky, not fit for purpose and the products don’t always work in the way you expect them to. As a result thing often go wrong.

And when things do go wrong manufacturers in financial services (banks, fund managers and the like) haven fallen into the bad habit of blaming their customers. Caught out by the T&Cs on your travel insurance policy (you mean that you didn’t read all 56 pages)? Lost money with an endowment mortgage or a split capital investment trust? “If only you were better financially educated”.

This is a cop out. Now I am not saying that we don’t need to teach the basics of how to run your finances in schools, of course we do. People need to leave education (at whatever age), not just with a firm grip of maths and English, but with a broad understanding of the basics of day to day living – and that includes current accounts, the importance of saving, mortgages, insurance (and protection) and how to use credit responsibly.

Rather my argument is that “financial education” shouldn’t be used as a cop out for the state of the financial services industry.  If financial services products were as easy to use as Apple’s products perhaps people would be happier to buy them and use them, and things would go wrong less often.

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