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Our future impact hinges on education

Promoting financial literacy for the public and for the profession

Jan 22, 2019 @ 2:20 pm

By Mark C. Tibergien

What role should financial advisers play in supporting personal financial education for our country's youth?

We have our enlightened self-interest, of course, but we also have the opportunity to help consumers take control of their financial lives, to attract more young people to the profession and to promote our industry's reputation as a force for good rather than a source of evil.

Consider the challenges. First, helping people with their financial lives.

The statistics are stunning, no matter the source. According to Northwestern Mutual's 2018 Planning & Progress Study, 66% of Americans believe they will outlive their retirement savings; 21% of Americans have nothing saved at all; and a large percentage of retirees solely or primarily depend on Social Security for their retirement income.

Career choice

The financial services industry is experiencing an acute talent shortage. Women and minorities in particular have avoided the business for a variety of reasons. We have an opportunity to replenish the advisory talent pool by exposing more young minds to the appeal of being an adviser. We can show them it's a career that is financially rewarding, intellectually stimulating and makes a meaningful impact on the lives of others.

Industry reputation

For decades now, consumers have ranked financial services low relative to other professions. While the catchall category of financial services includes bankers, brokers, advisers and agents, the average consumer sees people who work with money for a living as part of the same cohort.

Now consider the opportunities.

Consumers cite many reasons for not having savings, but the vast majority state they do not make enough money to save. Some believe they will not need retirement savings because of Social Security or a company retirement plan.

Financial choices

Other consumers prioritize paying down debt, struggle to pay monthly bills or have depleted their savings for an emergency. According to the National Endowment for Financial Education, two-thirds of U.S. adults admit to experiencing an unexpected financial setback in 2018. Emergency medical care and housing and car repairs represent the majority of these crises. The Bureau of Labor Statistics supports NEFE's research by observing that 62% of the average American's expenses go to three things: housing, transportation and food. The choices consumers make may be almost as important as their income.

(More: Closing the financial literacy gap: turning passion into action)

Most Americans are not taught how to make good financial choices, including how to prepare for life's surprises. Our society and economy depend on consumption and instant gratification. Many people may not comprehend the details of leasing over buying, depreciation versus appreciation, cash flow and credit card debt — yet these are among the many financial choices they make each day.

For the most part, our schools do not teach financial literacy. Imagine if we taught young people how to make good decisions around the concepts they will navigate as adults before they were actually confronted with such choices on their own. What if they learned to budget for grocery shopping and other purchases, how to open a bank account, and strategies for buying a car, planning a trip or saving for higher education or training.

Getting started

Financial advisers have an opportunity to change lives by taking a leadership role in financial literacy education. Many programs exist to help financial professionals engage with schools. The first step requires a commitment:

1. Influence your school board to provide the education.

2. Sponsor a financial literacy summer camp for elementary school students.

3. Adopt your high school to provide an accredited class on personal economics.

4. Provide scholarships to those who excel at the coursework.

5. Invite students to be interns in your firm, where you also teach them the basics of personal finance.

It is tempting just to write a check — but experiencing how transformative it is for kids to learn the basics of personal finance will feed your motivation and commitment.

You can make a meaningful impact. Isn't that one reason you chose to be in this profession in the first place?

Mark C. Tibergien is CEO of BNY Mellon's Pershing Advisor Solutions. He sponsors his former high school's personal economics class for seniors and a summer camp for elementary students in Michigan's Upper Peninsula.

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