Last month, Investopedia released a study that found a correlation between an investor’s financial knowledge and confidence in his/her retirement savings. Among the survey respondents who said they felt behind in their retirement savings, 58 percent self-identified as novice investors1. By contrast, only five percent of those who felt behind their goals self-identified as expert investors2.
These findings corroborate the notion that financial education is crucial for every investor—the more knowledge an investor has, the more confident they feel about their retirement savings plan. The old proverb that “knowledge is power” resonates here and should be taken seriously by financial advisors, because this research uncovers an easy strategy to better help their clients reduce their financial stress. Taking the time to educate and inform clients could help them feel more prepared and less worried, and it could also strengthen your relationship. Here are a few ways to get started:
1. Plan more one-on-one meetings
When you talk to a client face-to-face, in an individual setting, the meeting can feel more like a discussion and collaboration. It also creates more opportunity for the client to ask questions, specifically ones that relate to their personal situation. All of this taken together means that not only can you use this time to provide your client with information, but you can also provide them with customized information. Giving clients this kind of intimate, one-on-one time can be a great way to talk them through any questions they might have or any updates that you think they should hear.
2. Take initiative
When industry news breaks, be proactive about reaching out to clients. For example, when the election results were officially in or when the Fed announced the interest rate increases, those occasions are the perfect time to reach out to clients and let them know what the headline means to them. Your clients likely have those questions, but they might not ask you right away. Make the first move, explain the implications as they relate to their situation and goals, and share supporting material to help ease their minds.
3. Go through plans sponsors
If you’re working with retirement plan sponsors, consider offering them financial wellness programs. Financial education is in demand; seven out of ten American workers say that financial stress is their more common cause of stress3. That statistic suggests that, if they had access to financial wellness programs, they would take advantage of it—and that could lead to a new pipeline of clients. So, if you create an educational program strategy that can be offered to plan sponsors for their employees, you have the opportunity to bring in more clients, create more loyal clients, and increase your reach.
However you make it happen, it is crucial that financial advisors offer educational resources to their clients. In doing so, you can deepen your relationships, instill trust in your clients, and help them feel more confident financially. And, if you manage to get introductions to new clients in the process, all the better!
1 Retirement in Americas: The Search for Security, Investopedia, 3/17, most recent data available
2 Retirement in Americas: The Search for Security, Investopedia, 3/17, most recent data available
3 Financial wellness at work - A review of promising practices and policies, Consumer Financial Protection Bureau, 8/14, most recent data available
All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting or legal advice. As with all matters of an investment, tax, or legal nature, you and your clients should consult with a qualified tax or legal professional regarding your or your client’s specific legal or tax situation, as applicable.
The preceding is not intended to be a recommendation or advice. This material is intended for general use by financial advisors.