Founded in 2000, the European Financial Planning Association (EFPA) is a standards-setting body for financial advisors and planners in Europe that--to date--has over 94,000 certificate holders. It offers globally recognised certificates that are meant to educate and support financial sector professionals throughout their careers.

Present across several European countries, the Luxembourg association was set up in 2020 by Roger Hartmann and Marco Caldana. Hartmann, who’s chairman of the board of EFPA Luxembourg, has spent 42 years in the financial industry, working in Asia, the US and Europe. “Everywhere,” he says, “with a very long stop in Luxembourg, which was a great stop.” Hartmann, who’s Swiss, has even acquired Luxembourg citizenship. “My specialisation was--and still is--in wealth management, very much dedicated to education,” he explains. “Now that I’m also somewhere in another part of my life, I’m even more dedicated to education.”

EFPA certifications differ from other programmes like the chartered financial analyst (CFA) programme or the credentials offered by the Chartered Alternative Investment Analyst Association (Caia) because those are more “institutional” or B2B. “We are really B2C, because we certify not professionals who basically work with professionals; we are certifying so-called ‘financial advisors,’ as they’re called in the UK.” Here, these would be people involved in “gestion de fortune,” or the people advising private clients.

Start financial education at primary school level

When it comes to financial literacy and financial education more broadly, is enough being done in Luxembourg--and in Europe in general?

Hartmann hardly waits for the end of the question before giving me his response. It’s an emphatic “no.” With its strong financial centre, Luxembourg “should be very, very much in advance compared to other countries [that are] less developed from the financial point of view. But there’s still a lot to do everywhere in Europe.”

“When you look a little bit what is going on in the US, basically all people invest. Basically, it’s in the culture to invest, since the 19th century,” he continues. “Here in Europe, we are still a continent of savers. People have savings accounts, and yes, they know how to manage their savings account. But the European citizen is not present in the capital markets, and this is coming from a low financial literacy.”

“Financial literacy is too low, even in Luxembourg,” he emphasises. “If you really want to address the issue, I strongly believe we should begin to address it with the younger population. We should really go quite early into schools.”

Starting from what stage? Secondary school? “Even already primary schools,” answers Hartmann, “just to have a little bit of consciousness about the importance of money and money in general. When you begin early, you can also correct biases,” he says, like the bias that money is a problem only for men and not for women. “Gosh, today, this should be part of a very old history. But it is not. And it’s quite proven that we can do a lot in order to increase awareness about money with young women already at primary school and, of course, at secondary school. I think there is no limit in the age to begin with that. I would really begin very early.”

Initiatives in place

There are already efforts in Luxembourg, adds Hartmann, with the Luxembourg Bankers’ Association (ABBL) carrying out training programmes in schools.

The ABBL has, since 2015, organised the “Woch vun de Suen,” or “Money Week.” This year, it will take place from 17 to 21 March. Supported by the grand duchy’s ministry of education, children and youth, the annual event is part of the European Money Week initiated by the European Banking Federation. “Volunteers teach students in cycle 4 of primary education in Luxembourg the basic knowledge for healthy and responsible money management,” explains the ABBL. The initiative aims to help young people “understand the value of money and raise their awareness of the importance of budget control for their future.”

“But we should enhance further,” says Hartmann, and perhaps even continue at the university stage. “It’s really all about awareness and increasing this financial literacy.”

Pensions: the earlier you start, the better

The issue of financial literacy also plays into pensions, a topic that has been in the spotlight in Luxembourg in recent months, thanks to the government’s focus on the future of the pensions system, potential reform and dwindling reserves.

“If you believe that your state pension will not be good enough, don’t address it age 50, because it’s far too late, because you are too old already!” says Hartmann. Luxembourg’s pensions system has three “pillars”: social security contributions; supplementary pension schemes set up by employers; and private pension plans set up by individuals. Awareness around the pension system must begin earlier. “The earlier you begin, the better off you are at the age of 65. And that’s part of financial literacy.”

Crises are to be expected. If you start at the age of 25, then your time horizon is 40 years and crises will have less of an impact on your investment by the time you retire. “But if your time horizon is five years; if you begin to invest at 60, it’s far too late.”

Importance of financial advice

Hartmann also highlights the importance of a trusted financial advisor. “A trusted advisor--someone who is giving good advice--has the same type of therapeutic effect as a medical doctor,” he says. You go to a doctor where you feel comfortable discussing your health; you go to an advisor where you feel comfortable discussing your personal finances. “No trust, no business.”

“Trying to do everything alone, without advice, having the risk not to be properly trained on things; that’s where you could make mistakes and enter into investments that you shouldn’t do and you will regret,” says Hartmann.

The EFPA issues several different types of certificates for financial professionals, explains its website. Investors looking for financial advice might want to check if a prospective advisor has one of its qualifications, such as: European Financial Planner, who can provide “integrated” recommendations “including investments at portfolio level, estate planning, international taxation, retirement and insurance needs not only for private clients but also for business owners;” European Financial Advisor, who can assist with “investments at portfolio level, but also including basic insurance/retirement /credit/financing solutions;” and ESG Expert Advisor, who has “the skillset to integrate ESG considerations into their advisory practices, effectively manage climate-related risks, and provide informed guidance to clients on sustainable finance and investment opportunities.”

This article was written for the to the  magazine, published on 26 February. The content of the magazine is produced exclusively for the magazine. It is published on the website as a contribution to the complete Paperjam archive. .

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