US fund manager Mellody Hobson says financial literacy is the key to improving retirement incomes. Picture: Britta Campion

It’s financial literacy, says visiting US fund manager Mellody Hobson, recently named among Time Magazine’s 100 most influential people in the world.

She is the chairman of DreamWorks Animation, a director of coffee company Starbucks, and married Star Wars creator George Lucas in 2013, but despite her high-powered life she is passionate about a grassroots financial education for everyone.

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“All of the data shows that we learn most of our money habits from our parents,” said Ms Hobson, president of Chicago-based Ariel Investments, which manages $14 billion of assets.

“We have to mandate it in schools, we have step up our game on the literacy issue. My experience with people who want to have a secure retirement is they’re desperate to understand — they just don’t know how to learn and it’s a daunting task.”

Ms Hobson told an Australian Institute of Superannuation Trustees conference in Adelaide on Wednesday that as an experiment she asked people on the street in a professional area of Chicago about financial terms.

“One person told me the S & P 500 was a car race,” she said.

“There is one silver bullet and it is financial literacy. If you were literate about saving and investing, you will not make (bad) decisions or you will know to ask questions that will limit you making the wrong decision.”

Mellody Hobson with her husband, film director George Lucas, who were both in Adelaide on Wednesday. Picture: Andrew H. Walker / Getty ImagesSource:Getty Images

Ms Hobson said teaching children about money in schools gave parents permission to learn.

“All of your money affairs and habits you are passing on, intentionally or unintentionally. When you tell people that, they become more intentional. Whatever struggles or anxiety you have around money you are teaching it to your child,” she said.

“Warren Buffett says that compound interest is the eighth wonder of the world. If you understand compound interest, just that alone is a game changer. That affects what kind of credit card debt you take on and helps you to see the power of starting early even if you save small amounts.”

Despite another round of superannuation tax and rule changes set to sweep Australia, Ms Hobson said we could teach the US good lessons about retirement savings rather than the reverse.

“I feel like we should learn from you. The compulsory nature is something that I wish we could get to,” she said.

“You’ve done a lot of things right, even though you still feel like you still have a long way to go, you are attracting the best investment managers in the world because you have one of the fastest-growing pension funds in the world, so that says a lot.”