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Survey finds retail investors still lack financial knowledge

THE global financial crisis has raised individual awareness to financial planning in Asia Pacific but people still lack ample financial knowledge, an industry survey said.

Regulators should step in to protect retail investors from falling victims to sales hypes, said industry watchers.

About 66 percent of respondents said they are paying more attention to their finances than before, Citigroup said in a survey released during a two-day Citi-FT financial education forum that ended today in Singapore.

The annual survey was conducted in October online in 11 Asian countries, including China, targeting individuals over 18 years with at least a bank account or a credit card.

About half of the respondents said they were hit by the crisis and 39 percent of them said their retirement savings suffered serious losses due to the crisis.

About 29 percent of the respondents said they would know exactly what to do if they were given a lump sum to invest. Only one-fourth of the respondents said they have a formal retirement plan.

"Findings suggest that while a lot of lost ground to the crisis has been clawed back, there is still clearly a significant room for improvement," Citi said.

The wealth creation and emerging middle class in rising economies like China has made it necessary to shore up financial literacy education to avoid the return of the financial catastrophe, industry watchers said.

While financial institutions should scrutinize their internal system more strictly to avoid mis-selling, regulators should sit on the market rather than letting the industry itself determining where it's going, said Kishore Mahbubani, dean of Lee Kuan Yew School of Public Policy, Singapore.

Over-leverage, complicated derivative trading and flawed regulation had been blamed to form the worst global financial crisis since the Great Depression.

The China Banking Regulatory Commission had already stepped up efforts to curb financial institution's mis-selling and improve retail investors' financial education.

Banks are asked to limit investment-linked insurance products to their wealth management counters to protect the savers. Banks' wealth management products salespersons are also required to fully state they have disclosed risks of such products in written documents to trim hypes and frauds.


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