Financial Education: International Financial Education: International Financial Education: International Financial Education: International Developments and Country ExperiencesDevelopments and Country ExperiencesDevelopments and Country ExperiencesDevelopments and Country Experiences

Foo Lee MeiFoo Lee MeiFoo Lee MeiFoo Lee MeiFoo Lee MeiFoo Lee MeiFoo Lee MeiFoo Lee MeiGeneral CounselGeneral CounselGeneral CounselGeneral Counsel

Securities CommissionSecurities CommissionSecurities CommissionSecurities CommissionMalaysiaMalaysiaMalaysiaMalaysia

International Conference onFinancial Education & Financial Awareness:Challenges, Opportunities & Strategies

Istanbul, Turkey9-11 March 2011

The Global Financial Crisis saw the breakdown of all key pillars of investor protection

Self Discipline

� Poor corporate governance

� Unethical conduct/conflict

� Poor risk management

� Lack of transparency

� Poor disclosure & sales

Regulatory Discipline

� Inadequate oversight

� Regulatory gaps – arbitrage,

reach, structural impediments

� Regulatory capacity & resource

� Inadequate Education &

Awareness

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� Poor disclosure & sales

practices

Market Discipline

� Information asymmetry

� Education & Awareness gap

� Failure of gatekeepers –

Advisers, Auditors

� Conflict issues undermined

role of watchdogs- analysts,

investor associations, media

etc.

Awareness

Key challenges : ScamsKey challenges : ScamsKey challenges : ScamsKey challenges : Scams

Scams know no boundaries

- victims cut across gender, race, educational/social levels

- Technological advances increase ease of reach of scams across geographical boundariesgeographical boundaries

Challenge in ensuring reach of investor education to cuts across uneven and diverse (multi cultural/multilingual) population distribution

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Key challenges : Delivering Investor Education Key challenges : Delivering Investor Education Key challenges : Delivering Investor Education Key challenges : Delivering Investor Education in Rural Areasin Rural Areasin Rural Areasin Rural Areas

∙ Low literacy/educational levels

∙ Susceptibility to investment scams

∙ Influence of family and community

members in investment decisions

∙ Winning trust through local partners

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∙ Winning trust through local partners

∙ Geographical constraints

• Demographic profile of Malaysian population (Total :27.9 million)

– Malays & Indigenous (62%)

– Chinese (23%)

– Indians (7%)

• Multilingual society

– Official language: Bahasa Malaysia

Investor Education in a Multiracial and Investor Education in a Multiracial and Investor Education in a Multiracial and Investor Education in a Multiracial and Multilingual SocietyMultilingual SocietyMultilingual SocietyMultilingual Society

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–

– Language of commerce: English

– Language spoken by different ethnicities:

� Malay: Kelantanese, Sarawakians, Kedahans, Sabahans and other dialects

� Chinese : Cantonese, Hokkien, Hakka, Mandarin, Hainan & Foochow

� Indians : Tamil, Telegu, Malayalam, Urdu & Gujerati

� Indigenous people: Kadazan, Iban, Kelabit, Bidayuh & Kayan

• Different ethnic groups have different economic status, financial literacy levels, investment profiles and

risk appetites

• Limited language capabilities of trainers delivering investor education programmes to cater to the needs of

multiracial and multilingual society

Investor education approach needs paradigm shiftInvestor education approach needs paradigm shiftInvestor education approach needs paradigm shiftInvestor education approach needs paradigm shift

Traditional approach What needs to change

Strategy moving

forward

Investor education pursued

independently of other

regulatory goals;

Paternalistic;

Education must be viewed

widely, not as isolated

function;

Pursue investor education as

a key component of

Targeted approach to

investor education;

Complement ‘buy-side’

initiatives with sell-side

efforts;

Regulators take primary

responsibility – moral hazard

Intermediaries have little or

no role;

Focus on retail investors

Insufficient focus on

behavioral risk.

a key component of

regulatory function;

Leverage on opportunities for

investor education when

carrying out other regulatory

function;

Establish meaningful KPIs to

measure success and

effectiveness.

efforts;

Collaborative & coordinated

efforts with industry;

Embedding investor

education across the

investment chain.

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Strategy 1 : Targeted approach (Swisscash Strategy 1 : Targeted approach (Swisscash Strategy 1 : Targeted approach (Swisscash Strategy 1 : Targeted approach (Swisscash investors)investors)investors)investors)

GenderGenderGenderGender

GenderGenderGenderGender MaleMaleMaleMale FemaleFemaleFemaleFemale

Percentage (%) 75 25

AgeAgeAgeAge

Age BracketAge BracketAge BracketAge Bracket 20202020----34343434 35353535----49494949 50+50+50+50+

Percentage (%) 20.2 47.6 32.2

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.....targeted approach.....targeted approach.....targeted approach.....targeted approach

OccupationOccupationOccupationOccupation

Occupation Professionals RetireesHomemakers /Unemployed

Clerical Staff/ Teachers

Own Business

Percentage (%)*

25 6 6 35.7 26.2

ReasonReasonReasonReason

ReasonsFriends / Family

RecommendationsOwn Initiative / Internet / Advert

Colleague / Acquaintance Approach

Percentage (%)* 39.3 19.0 35.7

* 1 student = 1% *the remaining percentage did not state their reasons

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• Incorporates investor

education in marketing

• Provides effective product

Buy Sell

Investor education initiatives

targeted at investor

• focused on increasing literacy

and capability

Strategy 2 :Strategy 2 :Strategy 2 :Strategy 2 :Complement ‘buyComplement ‘buyComplement ‘buyComplement ‘buy----side’ initiatives side’ initiatives side’ initiatives side’ initiatives with sellwith sellwith sellwith sell----side effortsside effortsside effortsside efforts

• Provides effective product

disclosure

Investment products must be bought, not sold !

and capability

• Providing/improving access to

information on

rights/accountabilities and

products

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Schools

Rural /

Blue Collar /

Housewives

To inculcate money

management culture among

school children

To increase familiarity with

investing, awareness of

investors’ rights &

responsibilities and develop

resistance to scams

Financial

Literacy

Programmes

Widen financial

literacy

among key

target groups

Goal :

To create

Strategy 2 : ImplementationStrategy 2 : ImplementationStrategy 2 : ImplementationStrategy 2 : Implementation

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Universities /

Workplace

To increase sophistication in

managing savings and

developing capability in

investing

To create a greater pool of

informed, capable and

responsible intermediaries

Investors /

Potential

Investors

Financial

Capability

Programmes

Develop

Responsible

Intermediaries

knowledgeable

& vigilant

Investors

Increased focus on sales practice –disclosures & KYC

Well informed and responsible

investorsA responsible industry

• Incorporates investor

Strategy 2 : OutcomesStrategy 2 : OutcomesStrategy 2 : OutcomesStrategy 2 : Outcomes

BUYBUYBUYBUY

Schools

Rural /

Blue Collar/

Housewives

Universities/Wo

rkplace

• Incorporates investor education in marketing

• Provides effective product disclosure

Investing

Public

BUYBUYBUYBUY

SELLSELLSELLSELL

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Widen financial literacy/capability

Strategy 3 : Collaborate with industryStrategy 3 : Collaborate with industryStrategy 3 : Collaborate with industryStrategy 3 : Collaborate with industry

� Enhance role of intermediaries in development and

marketing of products - to include investor interests &

education considerations

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� Shore up importance and application of the ‘know your

client’ rule

� Enhance accountability of

SROs/gatekeepers/watchdogs

SIDC

Training & development arm of the

Securities Commission Malaysia

Financial literacy programmes

Capital market intermediaries

& industry

Financial capability programmes

Strategy 3 : ImplementationStrategy 3 : ImplementationStrategy 3 : ImplementationStrategy 3 : Implementation

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Financial literacy programmes Financial capability programmes

Seminars /

Workshops / Camps /

Challenges

Online learning :

Malaysian Investor

website, Exchange &

Associations’

websites

Media

- Newspaper articles

- TV capsules

Road shows

Programme delivery also via partnership with the following organisations:

� Ministry of Education –Schools

� Ministry of Women, Family & Community Development –Women

� Federal Land Development Authority –Rural Community

� Federation of Malaysian Manufacturers –Blue Collar Workers

� Institutions of Higher Learning –University Students

� Public Service Department – Government Employees

Strategy 4 : Investor education across the Strategy 4 : Investor education across the Strategy 4 : Investor education across the Strategy 4 : Investor education across the investment chaininvestment chaininvestment chaininvestment chain

Information

Self Knowledge

Seeking

Redress

Simple and effective

Financial literacy

� Know their rights

� SiDREC

Knowledge

ProductUnderstanding

Action

Redress

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literacy

Investment strategy

Make informed decision

Success factorsSuccess factorsSuccess factorsSuccess factors

� Industry buy-in required for ‘sell-side’

initiatives

� Strong supervision

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� Regulatory coordination - consistency of

approach in areas of overlap

� Accountable and responsible investors

� Holistic approach

School

ChildrenUniversity

Students

Parents /

Rural /

Blue Collar /

Women

A Holistic Approach To Investor Education

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Children Students

Employees of

Government &

Large

Organisations

General

Investing

Public

Institutional

Investors

To gauge the effectiveness of the B.M.W. programme and evaluate behavioral

changes in its participants, SIDC engaged a third party consultant to conduct an

impact survey. Conducted among 800 random participants, the results were

extremely encouraging/positive.

As a result of the B.M.W. programme, participants:

Some Positive OutcomeSome Positive OutcomeSome Positive OutcomeSome Positive Outcome

• 87%87%87%87% of the respondents are

now able to differentiate between legal and illegal investment

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• are now more vigilant when considering an investment.

• have started implementing a personal budget.

• have started setting financial goals using the S.M.A.R.T. method.

87.3%

85.8%

84.4%

legal and illegal investment schemes

• List of methods to differentiate according to awareness :

• High returns over a short period of time

• Difficulty to verify company information

• Money must be paid to claim prize

• Unsolicited phone calls

84.6%

73.9%

73.1%

73.0%

Thank You

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Thank You