A lack of visuals could be your blind spot

Most learning and communication happen through visual experiences. The human brain is designed to process visual information quickly, and the saying, “A picture is worth a thousand words,” has become iconic partly because there’s so much truth in it.

When it comes to working with and educating people on complex financial matters, we make learning visual: Performance graphs, asset-allocation pie charts and cash-flow burndowns all aim to communicate complicated concepts in a more digestible manner.

However, the financial planning industry still needs a better way to make the full story of a financial household understandable. It’s hard to build a house without a blueprint, and most people are cobbling together a shanty of financial instruments rather than assembling a well-structured residence with a solid foundation.

One of the biggest blind spots for investors is understanding whether they have the right tools at their disposal to build that solid foundation. Promoting the adoption of visual inventories of financial households can help bridge that gap. As financial professionals, the onus is on us to help people better understand what they have and how different investment vehicles fit together. At the end of the day, everyone could use more simplicity in their lives.

Building understanding

Only 57% of adults in the U.S. are financially literate, according to a 2016 study by S&P Global. So it’s critical to build a more robust understanding of strategies that will allow for more fluent conversations about overall financial well-being. Visualization and literally drawing where assets sit can make the learning curve less challenging by providing all the pertinent details of an investor’s current financial state on one page.

What we need to think about well before allocation is asset location. The location of holdings dictates legal, tax and control implications. Visualizing where assets are offers a full rendering of the current framework and whether it serves the overall plan. The key is to reach a point where investors can be honest about their financial condition and how to improve it to achieve greater security.

When you illustrate everything on one page, you can see how each piece of the puzzle fits, reflect on it, ask better questions and gain a clearer understanding.

H. Adam Holt is founder and CEO of Asset-Map.