AGF Marks Financial Literacy Month
Author: Kevin McCreadie
November 13, 2020
To mark Financial Literacy Month, AGF’s CEO and Chief Investment Officer, Kevin McCreadie, spoke to Junior Achievement about the importance of providing students with a solid grounding in personal finance to help them make sound financial decisions now and into the future.
AGF is a long-time partner of Junior Achievement of Central Ontario, supporting financial literacy courses such as “Economics for Success” and the “Investment Strategies Program”, which bring AGF employees into classrooms and GTA students into AGF’s Boardroom.
What does ‘Financial Literacy’ mean?
Education is one of AGF’s key pillars of social responsibility, and within it a focus on financial literacy. I’m a big believer in the importance of financial literacy –helping people make smarter choices, build better habits and make more informed investment decisions by empowering them with knowledge. I believe strongly that education is critical to helping people reach their financial goals.
Ideally, the seeds of financial literacy are planted early in life. In my household, we’ve always made a point to talk to our kids about money. As the CEO and CIO of a global asset management firm, talking about money and investing – even at home – comes with the territory.
A solid grounding in the basics of personal finance is at the crux of understanding so many of the general issues that affect everyone’s ordinary financial life – whether it’s instilling a culture of savings to buy a house, building up a retirement nest egg, paying off debt or understanding the value of professional advice.
Being able to thrive – and not just survive – provides people with a sense of empowerment and self-sufficiency, helping them achieve their personal goals.
What key skills come with being ‘financially literate’ and how is the organization helping young people learn these skills?
A few key skills learned along the path to financial literacy include setting and sticking to a budget, saving and starting an emergency fund, understanding how to use a credit card, protecting your identity and even the basics of investing.
I believe young people need to be introduced to investing, to make informed decisions about contributing to their workplace RSP or pension plan.
Financial literacy should be viewed as a basic life skill, right up there with reading and writing, general fix-it knowhow and learning how to swim.
It’s about ensuring you are given the correct change at the store, understanding what it means to only make minimum payment on a credit card and knowing the risks and benefits of locking into a long-term mortgage.
As a global asset manager, our employees understand finance and have a skillset that can be shared with the next generation of investors. Each year, we welcome students to our boardroom and share our experiences – both personal and professional – to help teach them about the importance of financial education. We also have a unique opportunity to introduce them to the financial services industry and discuss career paths within our sector.
Has the COVID-19 pandemic highlighted the need to support financial literacy programs for young people? Are there new skills or tools students needed to succeed in our changing economy and workforce?
This year marks the 10th anniversary of Financial Literacy Month and the goal this year is to help Canadians gain financial confidence and make informed financial decisions relevant to their unique circumstances – which may have been impacted by the pandemic.
Our goal when partnering with Junior Achievement is to help young Canadians understand their finances and instill basic principles around saving and investing.
We hope to help prepare them and give them the tools needed to address the financial challenges they may face during different life stages.
There is no doubt that this is a challenging time for many who may be struggling financially due to the COVID-19 crisis. And while the pandemic prevents us from welcoming students into our offices this year, it has reinforced our commitment to financial literacy.
As part of our sessions, we make a point to tell students about what we do and how our industry is evolving. Most recently, this has included discussions about digital transformation and the importance of integrating technology and digital skills into our workday. The digital transformation, accelerated by the COVID-19 pandemic, is creating exciting new opportunities within the more traditional asset management field.
Ultimately, we want students to understand that to succeed in this economy and workforce they need to be adaptable and open to change. This means embracing technology to address gaps and enhance the way we work.
How can students’ financial choices positively impact their future dreams and career choices?
When a student has an understanding of basic concepts in finance they are empowered to make sound financial decisions. This is something I’ve seen with my own sons.
When students have the skills and knowledge to make informed decisions about managing money, they can put a realistic plan in place to pursue their dreams – whether it be saving to pay for their education, or life experiences like travelling, or eventually to buy a home.
It also helps young Canadians understand the importance of establishing and maintaining good credit, which is critical since it affects everything from getting a cell phone to obtaining approval for a credit card, loan or mortgage, even their ability to get a job.
What are the top one or two lessons AGF and Junior Achievement seek to teach young people about financial literacy?
We believe that the keys to success when it comes to financial literacy are early intervention and lifelong learning.
Teaching young people about financial literacy at an early age sets them up to be confident and capable when it comes to money. There are many opportunities in everyday life to incorporate examples and learn about finances.
It’s a gradual process and as they get older, they can be introduced to more complex concepts and given more practical tasks to develop their money management skills.
What lessons have you taught your own children about money?
Now that my children are getting older (one is in university while the other is in high school) I’ve set up accounts that I use to help teach them a few basics about money. The main lessons I hope to impart are the fundamentals of saving and investing, and the importance of giving back.
I also aim to constantly drive home with my kids is the importance of taking a disciplined approach. Too often, savers can be tempted to spend impulsively while investors can be tempted to overreact to the latest news.
When saving, discipline means ensuring you commit to socking away part of every paycheque or allowance and giving it sufficient time to grow. When it comes to investing, discipline means having a clear understanding of your objective, risk tolerance and time horizon, and selecting investments that clearly fit within that framework. It also means fighting the emotional urge to panic-sell after losses or negative headlines and instead recognizing these dips as potential buying opportunities. After all, we get excited when our favourite jeans or sneakers go on sale. But for some reason, when share prices fall and companies are “on sale”, we tend to shun stocks.
When it comes to selecting investments, I challenge my children to research potential investments and discuss them with me. I’ll ask them questions to verify their understanding of the company or strategy and press them on the alternatives they’ve considered.
Why does AGF partner with JA Central Ontario?
AGF has a long-standing partnership with Junior Achievement supporting financial literacy programs that have brought AGF employees into Ontario classrooms and GTA students into our downtown board room to learn about “Economics for Success”. This program emphasizes the advantages of staying in school and how this choice can positively impact their future. Students map their interests to possible careers and begin to learn the ins and outs of budgeting in preparation for the financial reality of post-secondary life.
We are also using our financial expertise to participate in Junior Achievement’s “Investment Strategies Program” (ISP) next year. This six-week online competition uses live stock market data to teach students key investing principles, including learning how to research and select investments, and manage an online stock portfolio. This prepares them to make savvy investment choices throughout their lives, better preparing them for their future.
Ultimately, we want the next generation of investors to have the confidence to make informed financial decisions and take an active role in the direction of their personal financial futures. And to help make this happen, AGF will continue to support educational initiatives aimed at strengthening the financial literacy of all Canadians.
Kevin McCreadie is Chief Executive Officer and Chief Investment Officer at AGF Management Ltd. He is a regular contributor to AGF Perspectives.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
© 2022 AGF Management Limited. All rights reserved.
Written by
Kevin McCreadie, MBA, CFA®
CEO and Chief Investment Officer
AGF Management Ltd.
