Why is financial education important?

From managing household spending to picking out the right mortgage product or insurance policy, financial calculations are an integral part of our lives. Of course, there’s a big difference between being an expert in complex financial issues and simply having enough knowledge when it comes to money management to get by.

Here, we outline why it’s so important to have in-depth training in order to take on the specialist role of a financial adviser, and look at what this type of training entails. We also explore the issues of financial education more broadly, and examine how this differs from financial literacy.

What education do you need to be a financial adviser?

Financial advisers help people with some of the most important practical decisions of their lives. Their job is to advise individuals and organisations when it comes to choosing investment, pension, insurance, mortgage and savings products. Given that the stakes are so high, it’s little wonder that there are strict rules in place concerning who can operate as a financial adviser.

In order to work as a trainee financial adviser in the UK, you must hold an industry-recognised qualification as set out by the Financial Conduct Authority (FCA). One way to do this is to complete a specialist training course. At Simply Academy, we offer a range of FCA-approved training programmes, including the Diploma for Financial Advisers (DipFA®). If you prefer, there is also the option of studying for qualifications such as DipFA® through an apprenticeship.

Gaining these qualifications isn’t just an exercise in box ticking. It’s crucial for ensuring that you’re able to provide sound financial advice to your clients.

What is financial literacy?

Everyone, not just those planning careers in finance, can benefit from being financially literate. This means possessing the knowledge and skills needed to make effective, informed decisions about your finances. It gives you the power to make the most of your money, and potentially to improve your life.

Being financially literate makes you better equipped to perform a whole range of tasks, from seeking out the best deals on products and services to managing your savings.

What is the difference between financial literacy and financial education?

Strictly speaking, financial education is considered a specialised form of higher education, typically undertaken by students and apprentices who have completed their secondary school qualifications. However, the term can also be used to describe far more basic and often informal forms of financial training delivered in schools and adult education centres in order to promote and improve financial literacy.

This type of training is often best started at a young age. Research has shown that children and young people who report having some financial education while in school are more likely to have a bank account, save up frequently and be confident in terms of managing their money. In turn, this can set them on a path to more successful financial management as adults.

The different nations within the UK incorporate financial education into their school curriculums in various ways. For example, in England it is included in the national curriculum in secondary schools only, where it is incorporated as part of maths and citizenship classes. Pupils are taught about a wide range of issues, including insurance, pensions, savings, budgeting, debt and credit, and managing risk, with the ultimate aim of instilling a higher level of financial literacy in young adults across the country.

The key thing when it comes to financial education is to make sure you have the knowledge and skills that are relevant to your particular circumstances. Whether you need to manage household finances, run a business or you’re planning a career as a financial adviser, you should take steps to ensure you’re sufficiently clued-up to achieve your aims.