A study of financial literacy carried out by the Organization for Economic Cooperation and Development found that people in Hong Kong had the highest levels of financial knowledge out of all 30 countries surveyed. But in the same study, Hong Kong came 29th in terms of its population’s attitude towards financial planning.
The research, which came out in 2016, presented an interesting challenge for David Kneebone, General Manager at the Investor and Financial Education Council (IFEC). If Hong Kong people were so well informed about financial topics, why were they failing to act on this knowledge?
“This became such a crucial finding for us to appreciate. While Hongkongers are, undoubtedly, some of the smartest people in the world in terms of money, they know what to do but they don’t necessarily do it. The biggest challenge we have with attitude is long-term planning and an unwillingness to prepare,” says Kneebone.
A look at other research, such as Hong Kong University’s Public Sentiment Index, showed that the problem was particularly acute among 18 to 29-year-olds, with this age group experiencing a lack of hope around issues such as whether they could afford to buy a home, or would have good career opportunities in Hong Kong.
“It is a distinct issue that we all need to be very responsible for and mindful of and work to improve,” Kneebone says. He stresses that while it is important to be realistic with people, it is also crucial that they understand the importance of having a financial plan.
“We are firm believers in financial planning, not only for short-term goals, but also mid-term goals and, crucially, long-term planning,” he says.
To help people plan, Kneebone believes they must have access to independent, impartial information to balance the volume of information and advertising that comes from the financial sector, and this is where the IFEC comes in.
He describes the IFEC as being the public lead on financial education in Hong Kong. As such, it sets up the frameworks and structures to help a range of stakeholders, including educators, financial services companies and non-governmental organizations (NGOs), to deliver financial education. It also produces educational material, which is available to consumers online. “What we have done is put things in place to enable different groups of people to know what financial messages are important,” he says.
“It is really important that people create a bit more time for some of the larger financial decisions they may make in their life.”
He points out that if people are provided with the tools to know how to deal with debt, or assess the risk of an investment, they can start to pick out where the consistencies and inconsistencies lie in the multiple sources of information on financial matters that they hear from, and they can start to challenge some of these sources. “We have to be realistic because we are a very time-poor community in Hong Kong. People may only have three stops on the MTR to make a decision. Having said that, it is really important that people create a bit more time for some of the larger financial decisions they may make in their life,” Kneebone says.
When it was first launched in 2012 as a subsidiary of the Securities and Futures Commission, the organization was called the Investor Education Centre, but it changed its name to the Investor and Financial Education Council earlier this year at the request of the Hong Kong government. “In some ways it was a correction. The challenge with the name Investor Education Centre is that you wouldn’t naturally turn to such an organization for information on insurance, debt, wills and the various other topics we cover,” Kneebone explains. “The number of retail investors that exist in Hong Kong is very high compared with other economies, and the complexity of financial products in Hong Kong is quite diverse, so I am quite happy with the term ‘investor’ always being there, but the key words are ‘financial education.’”
Building a framework
Kneebone has been in his current role since 2014, which he describes as being both a strategic and an operational lead. Alongside running the organization, he is also one of nine board members of the IFEC, which includes representatives from Hong Kong’s four financial regulators, as well as industry representatives. “I am the bridge between the board and the organization itself,” he says.
Kneebone joined the IFEC when it was only a year old, after the previous general manager had to return to Australia. He says of his predecessor: “He had done a great job on recruiting, and he had a draft business plan in place for the first year, which made my job easier. The challenge was then to set up the framework.”
He talks about creating the organization’s framework in terms of building a house with four walls. One of these walls was to create a financial competency framework for Hong Kong, looking at the financial skills and knowledge people needed to have to promote ideal behaviour. Another was to introduce a financial literacy strategy for Hong Kong to motivate stakeholders, including educators, financial services companies, NGOs and charities, to promote financial education.
The third wall involved creating an independent and impartial source of financial information for consumers to use, while the fourth wall was to establish a robust research base on financial literacy levels in Hong Kong to share with other stakeholders.
In addition to these four walls, Kneebone also looked at how the success of the IFEC’s programme could be evaluated. “Once we had those four things in place, it was about making sure they were always up to date. We have done a second version of the financial competency framework to make sure current topics like cryptocurrencies are included,” he says.
David Kneebone moved to Hong Kong from his native New Zealand in 2014 to take up his post at the IFEC.
Meet the Chins
One of the achievements Kneebone is most proud of is the IFEC’s creation of The Chin Family as tool to engage consumers. The campaign, which was set up in 2016, follows a fictional family of two adults, two children, two elderly parents and a cat, looking at the financial challenges they face at different stages of their lives and how they can plan for them. “There was a certain formality to the IFEC, but we also needed a group of people that all Hongkongers could relate to. By being able to recognize themselves, there is a degree of empathy we can build with people. It creates interest and is fun and breaks down the barriers.”
Campaigns around The Chin Family have ranged from teaching children about managing pocket money, to planning for retirement, to understanding green financial products. “I really enjoy watching Chin Junior on Instagram talking to millennials and their reaction. The number of people liking and sharing it is growing remarkably,” Kneebone says.
At the other end of the age spectrum, Grandma Chin has encountered problems with identity fraud, and the website has chartered the steps she needed to take to put things right.
Kneebone says awareness of the Chin Family as a financial resource is continuously growing with more than 60 percent of people in Hong Kong knowing about the campaign. “We need to continually invest in that resource to make sure we have got the right interactive tools, the right videos and always have up-to-date content. The messages we give must be succinct and concise, and relevant or people won’t use us. The usage is going up not down, so I think we are doing it right.”
Kneebone says the biggest challenge of his work is meeting the expectations of what can be delivered in terms of financial education. The IFEC engages various stakeholders, including government agencies, regulators, financial and education institutions, to gain insights from experts and improve the delivery of our financial education initiatives. “What happened around the crash of 2008 and the subsequent failure of companies and products hugely damaged trust in Hong Kong in terms of the financial sector in general, and that issue still exists. The breakdown in the relationship between the retail consumer and the financial sector is still very real, and the financial sector still has an incredible amount of work to do. We often find ourselves in the middle.”
He says that in order to rebuild this trust, not only is a strong regulatory environment needed, but consumers must also be able to exercise their own market power through making informed decisions. He thinks the situation is improving, and points out that a number of financial services companies now spend tens of millions of dollars on financial education, which they were not doing in 2012. “I am incredibly pleased that they recognize the benefits of financial education. At the same time, a number of NGOs have also set up centres of excellence that specialize in money management, but where are the others? Why don’t they get that increasing the financial education of their customers is something that will probably pay off?”
“The breakdown in the relationship between the retail consumer and the financial sector is still very real, and the financial sector still has an incredible amount of work to do.”
He points out that the situation in Hong Kong is particularly complex due to the high level of retail investors, with 39 percent of people owning stocks, rising to 52 percent among people aged between 30 and 49. “It is incredibly high. It is exciting because it means we have a group of people who have some knowledge through experience, but they may not be making the best decisions,” he says.
He adds that there is also a high tolerance for gambling, and consumers need to understand that stocks are a long-term purchase. “We have watched a bit of panic selling. One day, eight different media commentators were saying ‘sell now,’ which was somewhat irresponsible. Short-term holding is a bit too common here,” he says.
Another challenge is ensuring consumers get information from the right places, with people’s main source of information for financial decision-making still coming from family and friends. “We put forward a key message, which is just because your friend or colleague bought it, doesn’t mean it is right for you, whether it is an insurance product or a retirement fund or a cryptocurrency,” Kneebone says.
He adds that the biggest risk to consumers is quick decision-making, including not seeking information from multiple sources, failing to read the key facts statements of financial products and not understanding the terms and conditions. As well as empowering consumers, one of Kneebone’s favourite aspects of his job is empowering his staff. “I have a team of 23 people and my job is to create an environment that allows them to prosper. The more they prosper, the more the organization prospers. The more motivated and excited and passionate they are, the more we benefit,” he says.
One of Kneebone’s focuses has been building a financial literacy strategy for Hong Kong to motivate stakeholders to promote financial education. He is pictured here holding The Chin Family’s bus.
Rich Kid, Poor Kid
The Hong Kong Institute of CPAs’ social responsibility programme, Rich Kid, Poor Kid, was named as 2019 and 2020 Financial Education Champion by the IFEC. The programme, which has been running since 2005, has seen “Accountant Ambassadors” hold free seminars for more than 140,000 primary and secondary students in Hong Kong.
Kneebone praised the initiative, saying: “We appreciate that the Institute plays a pioneering role in teaching money management concepts to students with the Rich Kid, Poor Kid programme at primary and secondary schools. The programme encourages the young generations to practice financial responsibility and fills the knowledge gap that has not been taught in schools.”
He adds that accountants, who represent professionals in financial management, can also serve as role models for the students, passing on their skills and experience to them. “There is an enormous role that can be played by members of any financial-based organization.” Kneebone also thinks it is particularly important that teachers have access to financial education and resources, as they have a greater opportunity to influence children. But he points out teachers cannot be expected to teach financial topics if they are not trained in this area.
“We have got some teacher training workshops occurring in Hong Kong, but they are largely attached to business and economic teachers. There is an enormous amount more we could do, and I think as a professional organization, it is a topic [the Institute] could take on.” If there was one piece of financial regulation he could change, he adds, it would be to make financial education mandatory in schools.
A marketing background
Kneebone’s career has seen him move from private sector to public. He started out working as a sponsorship executive at a bank in his native New Zealand, before moving to telecoms company Spark New Zealand as communications manager. He also had stints at marketing companies Jack Morton Worldwide and Precinct in Australia, where he was chief executive officer, as well as setting up his own marketing consultancy. In 2006, he joined the Commission for Financial Capability (CFC) in New Zealand, which has a similar financial education remit to the IFEC. He was appointed executive director of the CFC in 2010.
“I think the mix of running agencies and also being client-side has helped prepare me for dealing with a variety of situations,” he says. “Running agencies for eight years taught me an awful lot about humanity and greed. When I went back to being a client, I was a very different client. I had a lot more respect for the challenge that people in agencies face and it certainly changed the way I worked.”
He reached a turning point in his career in 2006 when he was running a large agency in Sydney, and was working for a client that was largely owned by a pension fund. “The big decision for me for moving from the private sector to public sector was that I wanted the public to be the shareholder. I wanted them to determine whether what I was doing was successful or not, and not to simply be responsible for maximizing shareholder return.”
He adds that although he will probably return to the corporate sector at some point, working in the public for the past 15 years in three different countries and seeing change has been enormously satisfying.
Kneebone, who moved to Hong Kong in 2014 to take up his post at the IFEC, says his two biggest passions are cooking and tennis. He also enjoys sampling Hong Kong’s many restaurants. “I love the food. There is so much variety and the ability to try a cuisine from anywhere in the world. There are so many different places and it has been fun exploring those options.”
He says he has learned a lot about the difference between the Chinese cuisines while living in Hong Kong. He particularly enjoys Shanghai and Sichuan food. “I naively did not appreciate the breadth of Chinese cuisine, and I will always love it. I also know more about milk tea than I ever thought I would previously.”
Kneebone is moving back to New Zealand early next year and looks forward to getting a cat and dog when he’s there. He describes his time in Hong Kong as being nothing short of a great adventure. “It has been an incredible privilege learning so much about a culture that was very new to me, but it is time for me to go and be among family and friends again and enjoy all the well-being that comes with that.”
Rich Kid, Poor Kid, the Institute’s social responsibility programme, was named Financial Education Champion in 2019 and 2020 by the Investor and Financial Education Council.