The Filipino psyche on Money Part 1

Last July 20-21, 2012, I got the chance to attend the Money Summit and Wealth Expo 2012 at SMX, Mall of Asia. At one point during the forum, the Financial experts at the Money Summit were amused that some people paid and went to the Summit expecting specific answers to their questions like what stocks to invest in, how long will the bull run last, when is it a good time to invest, are we nearing the market peak and so forth.

What most Pinoys (slang for Filipino) are not aware of  is that the goal of these financial experts is to change the paradigm of Filipino mindset when it comes to investing since it appears that Filipinos are not wired for long-term investments. People are always looking for a quick fix, get rich quick scheme, and risk-free investments. Proof? Just go to a lotto outlet esp. when the jackpot prize is over P100M. Imagine the windfall for just a small investment, right?

The mere mention of catchy phrases such as “Do you want to know how to earn P1 Million in 1year”, “Do you want to be debt-free?”, “Think Rich Quick”, etc. will definitely make heads turn. It’s a sure-attention grabber and attracts every Juan (the Pinoy label/version of Uncle Sam), men and women alike. Why is this so? Is this kind of attitude borne out of our economic class? We were once dubbed as the “sick man of Asia” so is there a correlation with our being poor in general as Filipinos and this has been ingrained in our culture that is why any talk on money has a hypnotizing effect on most Pinoys? Are most Pinoys trapped in financial deficit? Does that explain why Financial Education is experiencing a boom of late? If you will look at the social media, many financial educators, legit and wannabes, are taking advantage of this trend by inviting Filipinos who are hungry for financial information in the pursuit of attaining their goals to be financially free. To some, Filipinos are clamoring for a way out of their debt misery, seeking ways to earn more, on top of their regular salary, looking for additional sources of income, to augment and pay for their mundane expenses. Is this exclusively Pinoy or this is simply human nature?

About 10 years ago, when I took up my exam to be a certified investment solicitor (licensed to sell mutual funds), I gathered from that seminar that in the US, the ratio of mutual fund investors are 70-30 (meaning 70% of the population invested in mutual funds, 30% just put their money in banks) while in the PH at that time, the ratio was 30-70 (meaning 30% invested in mutual funds and 70% in bankds). 10 years later, has been an improvement or change in the Filipino’s propensity to invest after financial education/seminars have become more popular with the help of social media?  Has there been an effect in the Filipinos habit of savings? How does financial education impact the growth in mutual funds and other investments, including insurance? How effective is financial education in changing the Filipinos’ mindset? The reason for my curiosity was about the same time last year, it was reported by Citibank that there are 6 Trillion deposits in the bank. This got me thinking. Why is the bulk of the Filipinos’ money still in banks? Does this mean financial education is not working at all or does it mean financial literacy is still in its inception stage in this country? Finally, what will it take to change the culture or mindset of the Filipino people toward investing esp for the long term? Isn’t it about time that financial education should be part of a college curriculum just like Real Estate? maybe we should change the DepEd’s curriculum and put in more practical ones like real estate, investing, insurance, etc. This will also create jobs for all RFPs, CIS, and other financial planners (for investment courses), real estate brokers, appraisers, consultants (real estate subjects), insurance agents (insurance courses), etc. aside from selling.

I asked Randell Tiongson, one of the most respected Life and Personal Finance experts in the country (, and one of the leading proponents of financial education in the country, to shed light on the issue above and he was quick to point out that 30% is a huge number. Further, he added that he would be surprised if mutual fund investors even hit 5% of the investments. According to him, the Total Mutual Funds in the country are about 120B vs. SDA (Special Deposit Accounts) at 1.5T and Deposits at 5T at this time (Go figure if this comprises 30%).  Even total funds of UITF and Mutual Funds won’t reach 300 B…. vs. 6.5T of deposits and SDA and this comprises a little less than 5%. Lastly, Randell opined that if we hit 30%, it will be very good for the investors… in effect, the higher, the better. When you add those directly invested in Stocks and Bonds, it might be a better number but still far from ideal. I surmised that maybe insurance was part of the equation as opposed to banks (savings).

Indeed, it would be interesting to get any reliable data on how far the Filipinos have progressed as Investors esp. with the amount of financial information that are available in print, web, tv and other forms of media.

Has there been a change at all?


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