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Encourage financial literacy by speaking to clients' emotional priorities

Teaching fundamental financial skills is not difficult; it simply requires a shift in perspective

Apr 26, 2017 @ 3:32 pm

By Dale Brown

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Despite its crucial importance, financial literacy continues to be an intimidating topic — not just for savers across the age spectrum, but for professionals who are in a position to help address the problem of financial illiteracy across the country. I've spoken with many financial advisers who would love to help teach financial skills in their own communities, but find it difficult to approach the subject in a way that will reach the audiences who need this education the most — namely young people, retirees and pre-retirees.

Teaching fundamental financial skills — and helping people develop a base of knowledge that can guide them through challenges like paying down debt, preparing for retirement and protecting their savings — is not that difficult. It simply requires a shift in perspective. And there's no better time to talk about creating that shift than in April, which is designated as National Financial Literacy Month.

(More: Professors give themselves a 'B' in financial literacy)

The most important point for advisers to bear in mind when speaking about financial literacy is, first and foremost, to present the topic as a way to help young people and retirees address their specific emotional needs, rather than presenting it as a path to wealth or becoming overly focused on particular concepts too soon.

As the Financial Services Institute's Marketing, Growth and Development Council recently determined in preparing materials to help advisers teach financial literacy in their own communities, reaching these audiences on an emotional level means drawing the connection between financial health and the things young people and retirees or pre-retirees care about the most.

For many young people today, those top emotional priorities include: being able to help others; having time to focus on their passions; and achieving a lifestyle that provides them with choice, security and emotional well-being.

So while a discussion on budgeting and the wonders of compound interest — absent the right context — may draw glazed looks from an audience of 20-somethings, advisers can inspire those same listeners to make healthy financial skills a fundamental part of their lives by explaining that excessive credit card debt can prevent them from giving back to their communities, or that budgeting can help clarify their priorities and enable them to devote more time to the pursuits they care about.

For retirees and pre-retirees, key emotional priorities are more likely to orient around maintaining a dignified and productive lifestyle that enables them to continue to contribute to their communities and the lives of their families, in addition to protecting the legacy they hope to leave to the next generation.

(More: Help wealthy clients to avoid deadbeat kids)

Advisers who try to dive right into a discussion on the finer points of Social Security claiming strategies or the Senior Health Insurance Assistance Program without tying it back to these motivating concerns, therefore, may find their audience drifting away. Draw the connection between taking advantage of the Senior Community Service Employment Program and maintaining a healthy, vital lifestyle, however, and the message will be more likely to hit home.

Advisers and other concerned professionals should also bear in mind that emotional barriers can be one of the critical factors preventing senior investors from learning what they need to know about possibly the most important financial literacy topic in America today: preventing elder financial abuse.

Many senior investors do not prepare themselves to spot the signs of financial abuse — or neglect to report it once it happens — because they cannot imagine one of their loved ones or close friends perpetrating such an act, and may feel ashamed when it happens to them. Advisers can overcome these emotional hurdles by letting retirees and pre-retirees know that there is no need to be afraid or ashamed if they take the time to learn about the telltale signs of elder financial abuse as early as possible.

Advisers can also offer crucial reassurance to seniors that keeping an eye out for indications of financial abuse in their dealings with family members, close friends or various service providers does not make them paranoid, ungrateful or judgmental. It simply makes them smart, and it makes them good stewards of the legacy they hope to leave to their children, grandchildren and others.

FSI is proud to serve as a resource for advisers and other professionals who hope to strengthen financial literacy in their local communities. Communicating with young people, seniors and other audiences on the topic of financial health can be a challenge. As we and our Marketing, Growth and Development Council point out in the new financial literacy materials we have developed for advisers the best and most effective way to convey these critical messages is to first relate them to each audience's cherished emotional priorities.

(More: Robo-advisers can have a positive influence on clients' financial literacy)

That is an approach that every adviser can understand. We urge advisers everywhere to take up the challenge of improving financial literacy in their communities — the goal of helping young people, retirees and others take charge of their own financial health is too important to look away.

Dale Brown is president and CEO of the Financial Services Institute.

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