National Strategy for Financial Education: Thailand Experience 2014 IFIE-IOSCO Global Investor Education Conference Washington, D.C., USA Saovanee Suwannarong Director- Financial Literacy Department Securities and Exchange Commission, Thailand
Outline 1. Thailand s National Strategy 2. Do what we can do 2.1 Sector level 2.2 Organization level 2
Status of National Strategies Worldwide 3
Thailand s National Strategy The Process (hosted by Set up a committee Gather info of members Conduct a national Survey Draw a roadmap Determin e target groups Assign tasks Monitor and follow up 4
Establishment of national committee May 2012, the Committee on Financial Literacy was officially established through a Ministerial regulation. Vision : To enhance financial capability of the Thais by improving their ability to manage money and have financial discipline which contributes to financial stability of their own and of the country. 5
Members of national committee Chaired by the Permanent Secretary, Ministry of Finance Office of the Basic Education commission Office of the Permanent Secretary, Ministry of Education Child & Pre Adult Education Ministry of Labour Social Security Office Office of the Higher Education Commission Office of Vocational Education commission Workforce National Savings Fund +2 Experts from Financial Institutions Government Pension Fund Committee Ministry of Finance Various Target groups Thai Health Promotion Foundation Stock Exchange of Thailand Bank for Agriculture and Agricultural Cooperatives SEC Insurance Commission Department of Local Administration Bank of Thailand Financial and Capital Market Government savings Bank Low income Earner and Farmer Cap Mkt Developme nt Fund Thai Investors Association Community Development Department National Village and Urban Community Fund office The Thai Bankers' Association Federation of Thai Capital Market Organization s Thai Life Assurance Asso. 6
2013 National Survey & Key Findings Key findings : Demand side About 29% lacks knowledge & skills Vulnerable groups are college students and low income earners Supply side Educators still lack proper skills and regular training Activities are not proactive, comprehensive and cooperative Content Content is not standardized School curriculum is elective, not mandatory No curriculum in college/university 7
Roadmap : Measures in 6 areas to change financial attitude & behavior of vulnerable groups to enhance skills of educators and influencers to develop standardized content to develop networking and expand cooperation among program providers to develop supporting regulations to develop knowledge base 8
Assignments 6-Measure Each member takes care 1-2 measures Pilot project for vulnerable group Target group: College/university student Objective: to lift FL and change financial attitude within 4 years through activities done by Financial & Capital market members Each member takes care the universities in few provinces 9
Progress Members submitted the action plan The SEC s proposal: financial education is not panacea include 3 aspects of financial consumer empowerment People want to know just enough to make a decision they must make due to a life event and be comfortable with their choice. This is less than you think they should know! 10
SEC proposed measures Financial education Choice architecture (to increase financial inclusion) Regulation Other measures 11
Financial Education FL as mandatory subject Enhance teacher capability Outside-classroom activities FL in workplace 12
Choice Architecture Products that serves target groups needs Investment scheme for low income earner Condition adjusted on L-T investment scheme for younger Product specifically for retirees 13
Regulation Push for mandatory provident funds Require proper selling practices Require mass media to provide complimentary PR time Deter advertisements that stimulate impulsive spending 14
Other measures : Public sector support Financial support /tax privileges to entities that provide FE for the public disciplined saving people entities that support individual s financial planning Set up single, independent agencies To oversee Financial education To oversee Pension system 15
National Strategy : Lessons learnt Able to see the whole picture, covering all groups of Thai population Know who does what Where are the gaps or areas to be improved However.. There are certain implementation constraints 16
NS : Implementation constraints 1. Many parties involve 2. Members have their own mission 3. MoF has priority issues to address 4. MoF has no authority over members 17
Suggestions 1. Member can determine their own target audience 2. Set up sub-committee if have common target group 3. MoF plays as a conductor, makes sure all groups are taken care 18
Example: Thailand Village Fund (TVF) Microcredit scheme for Their villagers. TVF can efficiently collect savings and debt replacement on a daily basis. TVF has insights villager s behavior and create money collection method accordingly. 19
Do what we can do Financial threat in Thailand 1. Lacking financial planning for retirement - low - 41% of respondents have no savings for retirement - risk-averse mostly save for retirement in saving account - Late planning for retirement (40+) 2. Rapidly aging society: 20.43% of population in 2024 senior:work force 1:5 (now) 1:3 (2025) 3. Very high household debts: at end Q3/13 80.1%/GDP People retire with inadequate money 20
Do what we can do Sector level MoU with 13 alliances & work in partnership with peers, mainly financial regulators & market participants Financial Literacy : A Road to the Nation s Prosperity Shared goal : Enhance long-term saving and investment for people s financial well-being Action plan being drafted in alignment with each party s ongoing missions 21
SEC Level: Wealth for the Mass Goal setting: Change financial behavior Goal Goal : Promote long term saving and investment for Thai people s financial well-being Approach Tools Financial Consumer Protection - prevent mis-selling - reduce promotion for impulse spending - fraud enforcement Financial Education - SEC - via intermediaries & market practitioners - via other organizations Financial Inclusion - develop easy-to-access distribution channels - provide plain, basic, easy-to-understand products Regulation (mandatory PVD/ require intermediaries to educate customers & choose products suitable to their needs etc.) Product Design (easy-to-access products + embedded protection e.g., default program, auto enrolment, services that encourage self-disciplined investing) Education Programs identified target, delivery design, evaluation etc. 22
SEC Level: financial education Identified Target Group Investment knowledge Target Group - Workforce - Senior-year students Objective Raise awareness of target audience about the importance of money management Key Message how to earn, spend, save and grow money Target Group potential & existing investors Objective Encourage target groups to invest for their future Key Message Investment is necessary for everyone and we should make investment that suits our risk profiles based on sufficient information 23
SEC Financial Education: Content Examples : 1. Encourage to earn, spend, save, grow money, keeping in mind self-sufficiency principles e.g. Basic money management : money in 3 bags 2. Saving before Spending 3. Finding leaks in your wallet 4. Inflation 5. Time Value of Money 24
Behavioral Finance and what we do Behavior Architecture inertia Retirement mutual fund Procrastination Bias Present bias Loss aversion PVD for listed company Bath1,000 start a journey to your dream Mobile application Status quo bias Target date fund 25
Take-away messages - If you want to walk fast walk alone but if you want to walk far walk together - FE is not a panacea, only FE can t bring well-being to people - 1 st having independent entity to do FE and plan a roadmap for national strategy, if not collaboration is needed - To have smooth cooperation, assign what members can do that get along their missions 26