October, the month dedicated to financial education, has just ended with numerous initiatives, mainly developed by institutions and financial intermediaries, some of which deserve to be remembered for the depth and effectiveness of the messages disseminated. Unfortunately, the justified sense of complacency that comes from these events quickly fades if you carefully read the pages of the Annual Report on the investment choices of Italian households presented in Consob and edited by a team of experts, coordinated by Nadia Linciano, head of the Research Department of that Authority.
His judgment is, in fact, decidedly not very reassuring: “The financial knowledge of Italians remains low and, in most cases, the economic-financial choices do not follow a structured decision-making process, as evidenced, for example, by the lack of diffusion of financial planning".
So let's go into detail on the main aspects examined in the Report, drawn up using a statistical sample of interviews with over 3 people, more than a third of whom had already been contacted in the previous year.
An interesting trait that emerges from the survey is that the male gender proves to be predominant in investment decisions of Italian families (about three quarters); even if in more than 80% of cases it results that one's decisions are shared with the spouse or with other members of the family nucleus.
Another characteristic element of this overall photo is the decided aversion to risk and possible losses on the part of the majority of our compatriots, with two-thirds of respondents unwilling to accept even slight losses from their investments.
Coming, then, to the financial knowledge, there are certainly disheartening data: over a fifth of the interviewees declared that they did not know any of the basic economic-financial notions (inflation, risk/return relationship, diversification, mortgage characteristics, compound interest); 54%, then, is not able to make a simple percentage calculation; In the end, over 30% are unaware of the standard panel of financial products consisting of checking accounts, stocks, bonds, mutual funds and bitcoin.
It also makes us think about the misalignment between real knowledge and ex post evaluations in economic and financial matters (i.e. after the punctual verification of the notions mentioned above) with deviations that determine the overestimation of one's financial culture in 28% of casesthus giving rise to the dangerous phenomenon of over confidence in investment choices.
All of this is reflected, as already underlined by Nadia Linciano, in the scarce diffusion of planning and control of one's financial choices. Only a third of respondents have a financial plan and of these "only 40% monitor their progress in detail" with relative annotation of expenses; while, among those who don't plan, 42% even consider it useless to have a financial plan!
Other worrying data that emerge from reading this Report are:: the limited use of a financial advisor (20%) of Italian families, who prefer to rely on informal advice provided by friends or acquaintances (40%) or even decide in total autonomy (40%); lack of knowledge of socially responsible investments, with 55% having no opinion of the three factors ESG (Environmental, Social and Governance); the residual percentage of investors (5%) who declare they have in their portfolio products of SRI category (Sustainable and Responsible Investment).
Therefore, one cannot fail to agree with the thought of the coordinator of the Report, when she claims that "it is important to strengthen financial education initiatives, taking care not only to convey notions and information, but also to stimulate the interest of the recipients of the initiatives themselves. Consob is working in this direction, also within the National Committee for financial, insurance and social security education and in collaboration with schools and many public and private actors”.
A warning to which must be added the authoritative judgment publicly expressed by the Governor of the Bank of Italy, Ignazio Visco, in his recent Prolusion at the University of Cagliari on the occasion of the inauguration of the 2019/20 academic year. On the one hand, he called for strong public and private investment in our country's human capital, "essential for increasing productivity and employment"; on the other he underlined that "the return on investment in knowledge goes beyond the economic dimension".
Unfortunately, the evidence from the latest Report on Italian Public Finance, edited by Giampaolo Arachi and Massimo Baldini, shows how far away the will in fact is for our country to decisively embark on this virtuous path of sustainable development.
