Financial education, a way to promote well-being

The financial education, a concept that emerged internationally in 2003 has evolved considerably since then. In 2005 the country Organization for Economic Co-operation and Development (OECD) established common principles and recommendations, marking the beginning of a worldwide effort to provide people with practical and theoretical tools to manage them personal finance.

Although financial education aims to enable people to understand and manage their finances, one of the problems is that in some cases its effects are limited, especially for people with low incomes. The key question is: how to overcome the barriers that prevent financial education from significantly influencing people’s behavior?

Experts say the answer lies in a behavioral approach. Behavioral economics, which brings together economics and psychology, offers a framework for understanding how human beings make decisions that are not always rational in financial matterspp. Prominent figures such as Adam Smith, Daniel Kahneman, and Richard H. Thaler have contributed to the discipline, identifying factors such as loss aversion and self-control that influence our financial decisions.

So-called “behavioral economics” not only reveals human limitations, but also provides tools for designing support and reinforcement strategies. These strategies are essential to help people make appropriate financial decisions, especially in the low income and financial inclusion strata.

According to research, financial literacy is directly related to the level of income and education. Developing educational programs that take into account people’s behavioral biases and cognitive limitations is critical to addressing this challenge, enabling them to overcome barriers to behavior change.

Financial inclusion and sustainable development

The National Survey of Financial Inclusion (ENIF, 2021) reveals that two out of three people aged 18 or over in Mexico do not compare financial products or know about them before buying, underscoring the need to improve financial literacy. Financial inclusion, while necessary, must be done in a way that benefits people, not harms them.

Public policy design and private sector participation are key in this process. Contrary to the misconception that financial institutions only seek the consumption of their products, they must incorporate financial education as a corporate social responsibility asset into their business model. Providing information and knowledge to clients allows them to make informed decisions, have access to better conditions in the area of ​​loans and investments, and thereby benefit their assets.

Ultimately, the goal of financial education with a behavioral approach is to achieve a state of financial well-being. This state means that people can easily manage their current financial obligations and feel secure about their financial future. With the determination of governments and companies, the path can be paved to a world where financial education is a powerful tool to improve the quality of life of people in all walks of life.

Afores, a tool

Since the creation of the new pension savings system, Afores can be an important tool for saving and putting financial education into practice. How to choose an institution that offers the best conditions? This should be a crucial question in deciding one or the other.

To do this, it is necessary to know how the Afores invest the money they receive from savers. In an increasingly complex financial environment, Afore Coppel reaffirms its commitment to providing security and better returns to its more than 14 million associates. The financial institution has deployed a comprehensive strategy that covers three key lines of activity: increasing investment in private instruments, strengthening its investment and risk management team, and implementing a technology tool based on artificial intelligence.

Juan Manuel Valle, director of Afore Coppel, emphasizes the company’s total commitment to finding investment alternatives that offer excellent returns with the lowest possible risk. In line with this vision, 40% of Afore Coppel’s assets are allocated to debt and equity listed companies, which exceeds the industry average of 16%.

In the past year, the institution has increased its investment in alternative assets such as infrastructure and energy by a significant 76%, outpacing the industry’s 4.6%. These non-traditional assets require careful selection, but have been shown to be less prone to volatility and often contribute socially.

Technological innovation driven by artificial intelligence

Afore Coppel has adopted Aladin, an investment platform that uses data and artificial intelligence to analyze the historical behavior of current events and financial products. This unique tool makes it possible to more accurately calculate the chances of success or failure of an investment and provides clients with a strategic advantage in a dynamic market.

Around 50% of its 13.7 million customers are young people under 35, Before Coppel You can make investment decisions with a more attractive risk profile and a longer time horizon. The institution currently has significant investments in infrastructure projects, especially in the highway sector, amounting to approximately 42 billion pesos.

In addition, Afore Coppel has plans to strengthen its investments in the energy sector and participates in global funds that cover energy, transport, water and waste. The entity’s vision is to take advantage of opportunities in infrastructure and energy and support productive and sustainable projects in the country.

Afore Coppel’s commitment is reflected in the growth of its investment and risk management team, which has grown from 28 to 66 employees between 2020 and 2023, most of them certified and specialized. Recently, the institution was recognized for Moody’s Local México rated (excellent), highest on the quality rating scale for asset management.

In an ever-changing financial world, Afore Coppel stands out as a benchmark, leading with innovation, determination and a solid strategy that strives to ensure a secure and prosperous retirement for its millions of members.

Editor’s Note: This publication is created with information from INEGI, CNBV, Coppel, Financial literacy, financial education and subsequent financial behavior. Management ScienceYale University Press as part of the strategic alliances of Grupo Editorial Criterio.

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