Investor Presentaiton
Fund
Authority
Relevance of investor education - government
perspective
Education &
Investor
Protection
IEPF
This way, Investor education and financial literacy programs have the potential to help improve financial outcomes for retail investors.
Some key benefits include more informed saving and investment decision-making, better financial and retirement planning, greater
confidence and higher participation in the securities markets, greater wealth accumulation, and increased awareness of investor rights
and responsibilities. (Lusardi & Mitchell, supra note 6 at 42-3)
Ideally, investor education and financial literacy programs, as a complement to securities market regulation and supervision, can help
address any misalignment of investor and industry interests, particularly with respect to information asymmetry. For example, investor
education could potentially reduce both the propensity for investors to mis-buy investment products and services, and for intermediaries
to mis-sell products and services. This could lead to fewer investor complaints.
From government perspective, investor education:
■ Helps in supporting informed and effective participation of consumers in retail investment markets
Encourages savvy and commensurate behaviours with a focus on the balance between short-term priorities and longer-term security.
This is the case in particular when individuals and households would have available income to dedicate to long-term investments, but
lack the financial literacy and confidence required to overcome the barriers
Increases the levels of investments (from low to high) and/or diverts investments from unproductive assets to better yield assets
(governments might wish to use investor education policies to stimulate investment in domestic capital markets to deepen the capital
markets). For emerging economies in particular, encouraging participation of local investors in domestic capital markets can increase
their depth and make them less dependent on external factors and more resilient to global financial shocks, as capital market
development tends to lower the sensitivity of asset returns to global financial conditions (IMF, 2014).
■ Contributes to effective financial markets regulation, as educated investors can support securities markets regulators by spotting and
reporting frauds and scams.
Prof. Kamakhya Nr. Singh, IEPFA Research Chair
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