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April is Financial Literacy Month and that’s a good reminder that regardless of the month, a smarter client is likely a happier client. That is to say many clients, while they want to remain clients, want to bolster their financial education and literacy.
No, advisors don’t need to become teachers in the traditional sense of the word, but data confirm there’s an appetite for more financial knowledge and it’s not just investing tips clients are after. Advisors looking to increase exposure to millennials and Gen Z should consider the advantages of integrating education into client discussions because surveys confirm many younger Americans don’t view them as knowledgeable when it comes to personal finances.
Worse yet, that lack of education is proving costly. Literally. A significant percentage of younger folks that confess to lacking adequate personal financial acumen also confess to making financial mistakes that have cost them $1,000 or more.
Point is a little bit of education from advisors can go a long in terms of attracting and retaining younger clients. Data confirm as much.
Young Clients in Desperate Need of Education
Don’t just take my word for it. A recent survey by Experian of 2,000 American adults indicates 60% don’t view themselves as adequately financially literate and the same percentage say that lack of education has led to a misstep costing them at least $1,000. However, things are worse among younger people.
“This trend is particularly apparent among younger groups with 71% of Gen Zers and 70% of millennials claiming their inadequate knowledge of credit and personal finance has come at a price. Twenty-nine percent of Gen Zers and 38% of millennials report these financial mistakes have cost $5,000 or more,” according to Experian.
While advisors might not view topics such as budgeting and credit scores as glamorous as securities selection and portfolio construction, younger prospects are apt to want the former in concert with the latter.
“The study revealed many consumers have an appetite for further education, with two-thirds of adults (66%) stating they’d like to expand their knowledge of credit and personal finance, with even higher percentages among Gen Zers (80%) and millennials (79%),” adds Experian.
People Trust Advisors
For advisors that are somewhat reluctant when it comes to personal finance education, consider the point that many clients trust advisors to provide them with that knowledge. That’s encouraging because they’re already obtaining related information from dubious social media sources or family members that are not experts.
“Additionally, they consider banks and credit unions (45%), financial advisors (48%) and national credit reporting agencies like Experian (37%) to be some of the most trusted sources to learn about improving their credit score,” concludes Experian.
The point: education is the foundation of financial success and with it, clients avoid regret and retain more money. Those are positives for advisors.