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Surprising Stats Revealed in Report on Financial Literacy and Retirement Planning


Surprising Stats Revealed in Report on Financial Literacy and Retirement Planning

In March 2016, Statistics Canada released a report call Insights on Canadian Society: Financial literacy and retirement planning. The report highlights a strong connection between financial literacy and retirement planning.

Most marketing and communications professionals in the financial services industry have long known these two concepts are closely related. 

But the report still holds a few surprises. For one thing, the audience you’re writing for likely has less financial knowledge than you expect, which will affect the way you communicate with them. How can you modify your communications efforts for an audience that doesn’t have the level of financial literacy you thought it would?

The study

The Statistics Canada report is based on the 2014 Canadian Financial Capability Survey (CFCS). Respondents of that survey were given a financial literacy quiz made up of 14 questions. They were then given a score based on their answers to the quiz.

After accounting for demographic factors, such as level of education, age and income, those with higher financial literacy scores were more likely to financially prepare for retirement and to know how much they needed to save for retirement than those with lower scores.

That’s the good news. The not-so-good news is that, across demographic factors, the average financially literacy score for those who were preparing for retirement was only 9.4 out of 14 (or 67%), and only 7.6 (or 54%) for those who weren’t preparing for retirement.

Overall, only 45% of respondents across demographic factors knew how much they needed to save for retirement. That’s not a high level of financial literacy for any group of Canadians.

How well do you know your audience?

The first rule of communications is “know your audience.” For example, when you’re writing for a broad audience with a range of financial literacy levels, you know to keep your writing simple, clear and concise. You take steps to make sure every member of your audience understands what you’re writing about and that your message doesn’t get lost.

But what happens when you think you’re writing for a more sophisticated audience of, for example, highly educated or senior-level non-financial professionals? Many communicators would take their writing up a level. They’ll use more sophisticated language, explain fewer concepts and make sure they’re not “talking down” to anyone.

Well, not so fast … you might not know your audience as well as you think you do.

The 2014 CFCS shows that being highly educated doesn’t always mean a high level of financial literacy, nor does hailing from any particular profession, financial or otherwise.

Although having a university degree was associated with slightly higher financial literacy scores (9.9), that’s still a score of just over 70%, meaning there are a lot of university-degree holders who don’t know very much about finance and investing. In fact, only 53% of university degree holders knew how much they needed to save for retirement.

In terms of professions, those in “management” had slightly higher financial literacy scores, with 61% knowing how much they need to save for retirement. All other professions scored significantly lower, with just under 50% of business and finance professionals knowing how much they needed to save for retirement.

Aim for inclusivity

What’s the takeaway here? No matter who you think your audience is, take an inclusive communications approach by assuming that not everyone you’re writing for will have the same level of financial literacy. Some members of your audience may have a high level of financial literacy, while there are plenty of others who may not be as financially literate.

Keep your message simple and clear by using easy-to-understand language and concepts, avoiding industry jargon, explaining more sophisticated financial terms and applying other plain language principles.

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