Sunday Email: Financial Literacy / Change

Read time: ~4.30 minutes

Happy Sunday!

Every Sunday I offer strategies for the week ahead and a thought to fuel your action.

I've been there more times than I can count.

I'm engaged in a pleasant conversation at a gathering when someone inevitably asks, "So, what do you do?" With a smile, I share, "I'm a financial advisor."

And then nothing. No follow-up questions. Just a nod and a polite smile that says it all.

I can almost see the wheels turning in their mind. A label gets slapped on me—a stockbroker, a salesman, a handler of wealthy people's money. The conversation dies, and the potential to share the breadth of what we do vanishes into thin air.

Other times, someone might ask for my "hottest stock tip."

Again, I find myself trying to steer the conversation away from misconceptions, explaining that we are far more than stock pickers.

et, the initial perception sticks like glue. No matter how much I elaborate, that narrow view rarely shifts.

These interactions aren't unique to me.

They highlight a significant challenge our industry faces.

Only 35% of Americans work with a financial advisor, and that percentage reflects a deeply ingrained perception: financial advisors are just for the wealthy. Many think we're here to help the rich get richer, widening the gap between them and everyone else.

The truth is, there are barriers—misconceptions—keeping more people from seeking our guidance. Some 38% of people believe the cost of advice is too high, and 33% feel they don't have enough assets to warrant working with an advisor. These are beliefs shaped by perception, not reality.

Yet, the statistics show that our help is needed.

Only 57% of American adults are financially literate. Over half say thinking about their finances makes them anxious. 61% live paycheck to paycheck and nearly a quarter have no emergency savings. These are startling numbers, especially when we, as advisors, see the opposite in our day-to-day work and have the knowledge and tools to help.

We know that what we do makes a real impact. Just by being there, we help alleviate financial anxiety, reduce stress, and provide clarity. While many of our clients see this value, the general public often does not.

This presents both a challenge and an opportunity.

If we want to shift the perception of financial advisors and broaden our impact, we need to focus on one crucial area: financial literacy. Improving financial literacy can break down the barriers that keep people from seeking our help.

It can also create a clearer understanding of what we do and why it matters.

I've worked with clients who span the spectrum of financial literacy:

• There's the widow who suddenly finds herself in charge of finances for the first time. She's starting from square one, often overwhelmed by the sheer amount of information and decisions she has to make.

• Then there's the client, who seems to grasp everything during our meetings. They nod, ask insightful questions, and engage deeply in the conversation. Yet, when they try to explain it to someone else later, they struggle to recall the details.

• Finally, I have clients who truly "get it." They come prepared, understand budgeting, debt management, and investing fundamentals, and use us to offload the responsibility of managing their finances because their time is better spent elsewhere.

Financial literacy does not discriminate by wealth or status.

It's not about being wealthy or not—it's about understanding how money works.

Financial literacy impacts everyone, regardless of their financial situation. It's about understanding the basics: saving, investing, and managing debt.

We in this industry get excited about these topics. However, many in the general public avoid them because they feel irrelevant or too distant to be meaningful.

For example, saving for retirement feels daunting and abstract, especially for someone juggling a job, family, and personal commitments.

The time it takes to become financially literate can feel overwhelming, and there's also the issue of cognitive dissonance. People may fear facing the reality that they aren't doing as well financially as they thought. Or, they may want to avoid the hard truth that they aren't on the right track despite their best efforts. So, they avoid it. They delay. They focus elsewhere.

This is where we, as advisors, have an opportunity to step in.

By making financial literacy accessible and engaging, we can help change these perceptions. I recently came across Next Gen Personal Finance's website, which features interactive games designed to teach financial lessons. One game, modeled after "Wheel of Fortune," focused on understanding insurance, and it was surprisingly fun and insightful. (Here is a link to see for yourself: https://www.ngpf.org/arcade/?gad_source=1&gclid=CjwKCAjwreW2BhBhEiwAavLwfGk-C9yF7TYO_51OnW9AZPtwmOjQrfFjHAWkH2O_SaEsiWFnINtIgRoCXZEQAvD_BwE)

This is exactly what we need—financial literacy that doesn't feel like a chore.

Imagine creating something similar for our clients. Think about the rise of fantasy sports and how it engages people. Why not create stock market challenges or arcade-style financial games that connect clients and their families? This could turn financial learning into a shared, enjoyable experience.

A focus on financial literacy breeds confidence in our clients—confidence in understanding, not surface level, but deeply.

Financially literate people comprehend strategies that are developed for them. They understand the rationale and journey for that strategy and can communicate this to others.

This is why it serves advisors well: to have more financially literate clients than less. These financially literate clients can talk confidently about what you are doing for them and the value of the strategy. And they can more easily share this with others, allowing their friends and family to see the value you bring. It's rooted in understanding as opposed to opaqueness.

We can also consider the value of these initiatives as a new revenue stream.

Many firms have successfully rolled out financial literacy programs for corporations. We have the expertise to understand what lies ahead for individuals and see the daily challenges families face. Why not create structured programs to share this knowledge, benefitting our firms and communities?

We often talk about engaging the next generation, and while it's a smart long-term strategy, it only sometimes feels like a priority when the payoff seems far off. But investing in financial literacy programs—especially ones that are fun, accessible, and relevant—offers a scalable way to build relationships with future generations.

Retirees who already have the time and interest to learn present another opportunity. For retirees, financial literacy "universities" could enhance their understanding and lower anxiety about financial situations, improving client-advisor relationships. While also creating an outlet in retirement that is fun and stimulating to the mind.

The key is engagement.

Creating PowerPoint slides or hosting traditional seminars just doesn't cut it anymore. We need to be creative and innovative, using technology to make learning about finance enjoyable and rewarding.

Yes, this might sound a bit utopian, and some may think it's not worth the time or effort. But I believe in what we can offer families—what we already do. The gap isn't in our work; it's in the public's understanding of what we do.

If we can change that, we can change everything.

Ultimately, it's not about selling our services or telling people what we do. It's about teaching—teaching the basics, building financial literacy, and changing perceptions.

Perception is our biggest barrier to growth, and it's one we can overcome together.

A Thought To Ponder This Week

2000 years ago pessimism kept you alive.

Living in a world of uncertainty, we developed a mindset of focusing on what could go wrong.

We didn’t move around for fear of the unknown.

We didn’t venture to try new foods for the fear of being poisoned.

We didn’t try new things for the unknown of what may happen.

News, information and insights didn’t travel quickly. Thus we stayed true to what we knew.

Moving to a new cave could mean death.

Eating a new food may mean dying.

Trying something new may mean the end of our time.

Protecting against the greatest unknown (death) was our number one priority.

Today, things have changed. Information flows quicker, science has evolved and laws have been created to protect us.

Yet, the ingrained mentality of our past still drives our decisions.

The amount of time we think about the negative potential outcome is great. While the amount of times the outcome becomes a reality is minimal.

The world has changed around us, yet our minds have stayed in the past.

Great awareness and willingness to change is necessary to free us from our past.

As advisors we have an opportunity to help with regards to how our past mental frameworks impact our current financial decisions. So, this week, identify one client who could use some more hand holding and invest in them.

It will pay off for both parties.

The best is ahead!

-Matt