An Advisor’s Role in Financial Literacy Month

Apr 11, 2019

As you most likely know, April is Financial Literacy Month. For some of you, it may rank lower in importance than National Tequila Day or Gluten-Free Diet Awareness Month (which actually could go together, as long as the tequila is 100% agave) – but for me, financial literacy is personal. When I think of financial literacy, I think of all the financial missed opportunities I’ve had and I wish there would have been someone, say a financial advisor, who would have taught me some of the basics of investing, mortgages and credit.

Regrets, I have a few…

You probably had similar financial challenges when you were younger, so you can relate to some of my “missteps,” like:

  • In the early 80s, I “invested” money in money market accounts that had huge interest rates. I didn’t realize that the inflation rates at that time were also huge, thus limiting my spending power.
  • I got my first credit card as a junior in college and it came with a $500 credit limit. As soon as I got it up to $500 (it was quick), they raised the limit to $1,000. As soon as I got it to $1,000, they raised the limit to $1,500. Even after I cut up the card, I was making payments for months and months.
  • In my first job, I bought a few shares in the parent company. I didn’t maintain any records of the purchase price or dates, so when I sold the shares later, I had no idea of the basis for tax purposes.
  • I didn’t start really investing (in the financial markets) until I was 31.

I think about that last one a lot. I missed almost 10 years of compounding interest and dividends that would have really been something to see. While I think I have made up for most of those mistakes and have been almost maniacal about saving since, I think about those “lost” 10 years with a bit of embarrassment. Not for what I missed, but that I didn’t know better.

Blame game

I’m not sure I can “blame” anyone for my lack of knowledge. My (typical) small-town Midwestern family didn’t talk about money; we had no exposure to the markets or investing. My grandfather had purchased farmland as an investment – when my dad passed away at 53, his IRA was 100% CDs at the local bank. I don’t think they knew any better either – believe me, there weren’t a lot of financial planners or advisors knocking on the Anderson door (or anyone’s door in my town). When it came to financial literacy, we didn’t have any.

I got lucky. My career in financial services started in investor relations, but quickly moved into roles where I was exposed to professionals that taught me about planning, investing and even taxes. I try to share those lessons whenever I can with new employees and just about anyone who will listen, but my opportunities are limited, and that is why I am writing this blog – your opportunities are not.

Giving back or paying it forward?

As a financial advisor, you have the perfect platform to discuss financial literacy, especially with clients and prospects (and their kids). More importantly, as a financial advisor (not a broker), the conversation can be more balanced and comprehensive. There are plenty of tools and resources that are available (and even free) for your use. So why not create an outreach to your network today and start a program that will build financial literacy in your community (however you define it)?

Some ideas to get you started:

  • Ask your clients’ permission and obtain email addresses for their college age kids (and above) for a literacy mailing list. You can send them articles and ideas to educate them on some of basics. As an example, Visual Capitalist has a great set of infographics in their Wealth 101 series.
  • Sponsor a millennial night, a pre-college night for incoming freshman (and their parents) or a college graduation “what’s next” financial literacy meeting. Look at programs from NEFE (as an example) that have workshops and resources that you can use for those small gatherings.
  • Be a resource. Last week, my younger son’s school had a career day. Unfortunately, no financial advisors were present to discuss their career or the importance of financial literacy. Let your local schools (and your clients) know of your availability for those types of opportunities.
  • Reinforce the message. Financial literacy is not “one and done.” Think about ongoing communication, messaging and staying in contact with people with whom you have interacted. Again, a separate mailing list via your CRM should make it easy.
  • Assign a financial literacy owner in your office. If it’s you, great. How are you going to keep on track? Is it a junior or staff member? How are you going to monitor? Put literacy into your business plan and as a line item in your staff meetings. Keep it present.

If you look at the calendar, there is a day or a month for almost everything, but financial literacy is something that should be near and dear to every financial advisor’s heart. It is in our wheelhouse, it is what we do. So, while you are sipping your gluten free tequila, ask yourself what can I do that can increase the financial literacy of my clients, their kids and my community.

Investing involves risk including the possible loss of principal.

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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