S&P made a global financial literacy survey. The survey measured the understanding of four fundamental concepts for financial decision making – basic numeracy, interest compounding, inflation and risk diversification. A person is defined as financially literate when they understand at least three out of four of these financial concepts.
As a result of the survey, only 33% or every third of adults are financially literate worldwide. This means that 3.5 billion adults lack an understanding of basic financial concepts – most of them in the developing countries.
Countries with the highest financial literacy rates are Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, Norway, Sweden and the United Kingdom, where about 65% or more of adults are financially literate. The understanding of financial concepts is highest in Northern Europe. The other side of the study is that South Asia is home to countries with the lowest financial literacy scores, where only a quarter or even fewer of adults are financially literate. Moreover, the rate varies widely across the EU.
My last blogging was about broken distribution channels. Having the facts of this S&P survey, there are two conclusions from my perspective. First, financial literacy is a key thing for developing countries, socioeconomic growth and Millennials, and therefore a huge business opportunity for new financial advisory business globally. Second, within just a few years FA has grown to be the top financial software platform provider in Nordics. The study emphasis we can succeed in the global level as well.
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Read the report: S&P Global FinLit Survey