Features | Financial Literacy

Behavioural intervention key to improving financial literacy, expert says

Wendy De La Rosa, keynote speaker at CPA Canada’s Mastering Money conference 2019, explains how CPAs can help their clients become more financially savvy

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portrait of Wendy De La RosaTrying to change our financial habits is similar to trying to lose weight, says Wendy De La Rosa, co-founder of Common Cents Lab and a behavioural scientist at Stanford University (Image provided)

Financial literacy is increasingly important in these turbulent times, when financial uncertainty plagues many Canadians.

The CPA Canada 2018 Canadian Finance Study revealed that 11 per cent of respondents were pessimistic about their finances, 45 per cent thought little would change, and three per cent didn’t know. And only 48 per cent gave themselves a B grade or higher in their overall personal financial skills. That leaves a lot of room for change.

At CPA Canada’s Mastering Money conference 2019, keynote speaker Wendy De La Rosa will look at how we can use behavioural science to improve financial well-being. 

De La Rosa, who is co-founder of Common Cents Lab and a behavioural scientist at Stanford University, doesn’t think simply educating consumers is the answer.

“Often, when we really want to help someone to improve their financial well-being, we think we should teach them how to budget, how to save, how to manage their money,” she says. “We think if we impart that wisdom and information and knowledge, it should translate into a change in behaviour. And, sadly, oftentimes, thats not how the equation works.”


Trying to change our financial habits is similar to trying to lose weight, says De La Rosa. We know we should be eating better and exercising. But it’s hard, so we procrastinate. 

De La Rosa found that 92 per cent of the people she surveyed can identify three actions they could take in the current month to improve their financial situation. These might include asking for a raise, working more hours or spending less. But just knowing what they should do was no guarantee that they would follow through.

She cites a study by researchers Daniel Fernandez and John Lynch, who looked at more than 200 studies to try to find the link between financial education courses and financial behaviour. They found that education counts for 0.1 per cent of the variance in financial behaviour—and the figure is even smaller for lower-income populations.

“If your goal is to change financial literacy, financial education is effective,” says De La Rosa. “However, if your goal is to change financial behaviours, you have to go beyond financial education. I call it a behavioural intervention. And we created a simple ‘three B’ framework to describe it.”

Here’s how it works: 


Pick the single most important behaviour required to meet the financial goal. This could be as simple as opening a savings account. And don’t mistake outcomes, such as losing 10 pounds, for behaviours (for example, eating an apple a day before leaving for work). Be specific.


De La Rosa encourages looking at barriers to change that can be controlled rather than the large structural ones that can’t be. 

For CPAs, she says it’s important to take a good look at the barriers that you might be unwittingly putting up because they might be discouraging your clients from taking action. For example, with every form you ask a client to fill out, with every trip they have to take to the bank, you are putting up a potential barrier. “But if you, as the financial adviser, start the process and simply ask them to provide a signature, you remove the barriers,” she says.


In studies, De La Rosa’s lab found that financial incentives—for example, increased interest or augmenting each dollar saved by ten or twenty percent—did not necessarily motivate people to save. Instead, reminding them of why they were saving—say, for a good education for their children—was more effective.

Beyond motivation, De La Rosa also found that automatic transfers (which are set up so that a percentage of a person’s income goes into savings) can be a useful tool for improving financial well-being. And again, it’s one that removes barriers. The customer doesn’t have to remember to log in to a banking portal or go to the bank. It just happens.

“Most of the work is in the details,” she says. “But as a CPA, you can control the details, you can control the way you set up a savings plan for your client. And even if you do not actually set up the plan, you can at least help guide your client to see how they can be more successful with it.”


This year, CPA Canada’s annual Mastering Money conference will be held in Ottawa, Ont., on November 7 and 8. Focusing on the theme of “Building resilience in volatile economies” it will bring together thought leaders and industry experts from across the country to address financial uncertainty and how Canadians can better understand it.