Financial Literacy for Wealth Management Clients | Genivity HALO

When it comes to investing or saving, clients need to understand the language involved. If they fail to understand the language, it can be difficult to discuss with your clients which plan is beneficial for them. Their future financial stability depends heavily on financial literacy. With the improvement of your client’s financial literacy, it will profoundly impact your clients future. For example, those with higher financial literacy have higher wealth in regard to retirement planning. Those with a lower literacy tend to have higher debts, do not invest, or have little understanding on mortgages or loans.

What is financial literacy?

Financial literacy is the ability to understand the language that involves daily financial activities such as understanding the function of a checking account, how credit cards work, how debt is accumulated, how a credit score is calculated, etc. It can impact the way your clients save for their children’s future education or for their retirement. To make a summative statement, it is the necessary knowledge needed to make the proper financial decisions that impact one’s current and future life.

Shockingly, financial literacy is not only a problem in developing economies but also in advanced economies such as the U.S. In fact, some consumers who think they have adequate financial literacy, tend to lack it. Education and income levels also play a role. Those with less education and lower income tend to be less financially literate, while those with more education and high income are the opposite.

This is why you should care.

  • Your clients are living longer. With this longer lifespan, your clients need more financial assistance and planning for their retirement. It is important that your clients are educated on financial literacy so their retirement can be better prepared.
  • Your clients will make the bulk of the decisions. While you will assist with providing them options in terms of services, if your client has little understanding of the terms involved, it can be difficult for them to gauge the proper decision for their situation. If your clients have financial literacy, the confusion can be reduced.
 
  • The lack of government aid toward retirement. Retirement planning used to involve Social Security. However, with the current knowledge that Social Security is expected to be depleted by 2033, this avenue is more as a backup plan than a secure method for retirement. Your clients must be financially literate to make preparations sooner and prevent their dependence on Social Security.

Overall, improving the financial literacy of your client can improve your client’s understanding and enhance the discussions made during client meetings. Financial literacy, no matter the age or wealth, is important for preparing future plans. Start educating your clients are an early state. Financial literacy classes are typically available for your clients at adult educational centers, colleges, or through federal government programs and events. However, if your clients are short on time, emphasize online learning such as searching the internet or reading business newspapers and magazines. Websites like MyMoney.gov is also useful as they focus on financial education.

Genivity is here to help. We place emphasis on helping advisors with goal-based financial planning that incorporates health wealth factors to provide personalized reporting. Genivity can assist in helping your clients understand the health factors that should be considered in terms of financial planning. This service lays the information in an easy-to-read manner, allowing your clients to better understand the importance of financial planning and their health.

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