Context

The role financial education plays in improving financial capability is recognised across G20 countries, with a range of programmes, workshops, seminars, and other resources available. This study examines the drivers and inhibitors of financial capability of those most likely to need assistance with their financial affairs. It draws on the experiences of financial counsellors in Australia, who deal primarily with clients in financial crisis, in order to determine these drivers and inhibitors.

The study

The research questions are:

• What are the factors that facilitate financial capability and effectiveness?
• What are the factors that impede the development of financial capability?
• What factors impact on the development of intention to engage in financially effective behaviours?

A qualitative research approach was used to capture in-depth descriptions of the experiences of financial counsellors; 18 financial counsellors (five men and 13 women) participated in the focus groups, which were held in Brisbane and in Hervey Bay. Four categories of factors were identified and drawn from the theoretical framework (called the Theory of Planned Behaviour): background factors; attitudes; social and environmental influence; and perceived behavioural control. In addition, the authors added skills and knowledge as a category due to the relevance of this to financial capability.

Key findings

• The study determines that a complex array of factors influence financial capability and presents 23 factors across the five categories ascribed in the study to financial capability. It is suggested that the Theory of Planned Behaviour be used by those developing and conducting financial literacy or capability programmes and for those researching them.
• Of the 23 factors that appear to influence the financial capability of those in financial difficulty, most can act to be both inhibitors and drivers, highlighting the complex nature of financial capability and the difficult task of those seeking to improve it.
• Financial counsellors have provided some insight into the types of interventions (such as mentoring) that may prove effective.
• The paper concludes that to a large extent, programmes and interventions are being developed with insufficient rigorous research into the influence of intention on behaviour to inform their design. It also recommends that the research should be extended to other stakeholders in financial capability, including financial planners.

Points to consider

• The authors highlight that the counsellors themselves are not financial experts and no action was undertaken to determine their levels of financial capability. It is a small qualitative study which limits its robustness. As a qualitative study it cannot identify which of the 23 factors are most important in influencing financial capability.

• The research reflects the opinions and experiences of a sample of 18 financial counsellors in an Australian context and hence the results may not be generalisable.

Full report

Factors that influence financial capability and effectiveness - full report