Russians want to know more about mortgages and mutual funds

The National Agency for Financial Research (NAFI) inquired how much Russians know of major financial services. It turned out that they are relatively well aware of bank deposits and consumer loans, but know very little of mutual funds and broker services. People seem to be most interested in mortgage loans.

In late 2006, as Chair of the G8, Russia offered to develop an international methodology to assess the level and dynamics of people’s financial awareness. A government program to eradicate financial illiteracy was to be launched last year. However, this did not happen. The program has not yet been approved by the Economy Ministry, Finance Ministry officials told RBC Daily.

Meanwhile, the low level of financial awareness impedes the implementation of many government projects, including on voluntary pension insurance. Guzelia Imayeva, NAFI’s Director for Development, complains that Russians have no clear understanding what financial literacy is and how to define it. Even banking services remain a mystery for many. “People make unacceptable mistakes such as putting their PIN code on their bank card,” Imayeva said.

This was the first research of this kind by NAFI. 1,600 people in 153 locations across 46 regions of Russia took part in the poll. Respondents were asked to rank ten major financial services by the level of awareness about them, putting the most familiar service first and the least familiar – last (tenth). The survey showed that people are best acquainted with fixed term deposits and consumer loans (ranked 3.4 and 3.5 on average); next come mortgages and credit cards (4.6 and 5.1), and the last position is occupied by mutual funds and broker services (8.6 and 9.4).

Respondents were also asked what services they would like to know more about. About a third said they wanted to know more about mortgages, while 26 and 24 percent would like to have more information about mutual funds and broker services.

“In the 1990s, our economic system was very unstable, and some people lost their money in financial frauds, which frightened off many,” said Vladimir Tikhomirov, senior economist at Uralsib. “Over the past three to four years, people have been showing more interest in financial services,” he noted. Indeed, this can be seen from interest, though little, in mutual funds.

Russia’s collective investment market has increased almost 10-fold over the past three years, according to Sergei Usichenko, head of the trust department at Maxwell Asset Management. “In large cities, there is enough information about such services. There are many management and investment companies providing all the necessary information and offering consultations,” he said. It seems that the lack of financial information is rather a problem for smaller cities and remote regions.

Source: RIA RosBusinessConsulting