At one end, Fame (faithful representative of the Chicago School ) pontificates markets rationality and , therefore , argues that investment decisions - observed as a whole, lead to an efficient allocation of resources in the real economy . At the other end, Shiller argues the imperfection of the markets based on the irrationality of investors and the blatant inequality in access to information.
We should not avoid the importance and significance of both positions : while the first case hardly supports the regulation of the markets and financial institutions to make them more transparent and accessible , the second theory bets to democratize finance, make financial institutions more inclusive , including more people , protecting them from risks and involving them in decisions making processes.
The corollary of this second thesis leads us inexorably toward financial education, understood as the process by which consumers improve their understanding of financial products and gain a greater understanding of the financial risks and market opportunities.
Financial education, therefore, can and should be a vehicle to restore confidence in the financial system. Even though some people say that we can cope without it, simply that’s impossible . Therefore you´d better become an actor qualified to participate in it knowingly. Does that mean we should all aspire to be teachers in economics? I do not recommend it at all, but we have to be able to communicate with many different providers of financial products (usually we have to cope with banks) .
So, when we sit in our bank branch we require at least two issues : first, a clear separation between the commercial and advisory function (advisor who must be free of conflicts of interest , ie perceive no incentive linked to an eventual product sale) , second , demand products that suit the interests of consumers : costumed to the risk of exposure, as well as the investors desire regarding the distribution of his savings : Where does my money go?
To answer that question, it will necessarily to create more transparent products , fully traceable , specially designed for the merchants sector. And for the sustainable conscious consumers, there should be social responsible financial products, excluding certain investments (in armaments , polluting industries, etc. . ) and selecting those with the best performance ( in terms of social , environmental and good governance ) . The great challenge of the Socially Responsible Investment (SRI ) is to influence future business strategies and align investor values with the investment.
The most Spanish committed consumer association we have worked with is Spainsif , a Spanish forum of SRI, with whom we have designed this video:
I encourage you from Ibercampus.eu , to support our efforts.
Member of the European Economic and Social Committee and Director of the Consumers Organization ASGECO