If there is anything 2020 has made abundantly clear, it is the need to be prepared for sudden financial setbacks and how to mitigate loss when security is swept out from under society’s collective feet. Those that were experiencing difficulty managing finances before the pandemic were the most adversely affected by it, according to Fortune, which is especially true among women and minorities who face unique challenges at home and in the workplace1.
“We’re behind the eight ball,” Mellody Hobson, board chair of Starbucks, told CNBC. “Having a financially illiterate society is dangerous, and we have to do something about that.” Hobson is a major advocate of financial literacy, having grown up without money, and while teaching adults about money is important, she believes impacting change begins with focusing on children. According to Hobson, Financial Advisors can find opportunities in their own backyard to bring financial literacy to students2.
The Ariel Community Academy, for example, is a partnership between the city of Chicago and Hobson’s firm, Ariel Investments, which provides first grade classes with investment portfolios worth $20,000 which the students learn how to manage over time, often learning to trade stocks and other assets by sixth grade, Grow reports. The students in these programs come mainly from marginalized communities3.
Another way financial advisors can assist those working to improve financial literacy is by asking the right questions and determining just where their individual clients are in terms of understanding their own finances and how to manage them, Forbes reports. This is especially true for female clients who, while not a homogenous group, are at a bigger disadvantage than men according to research conducted by the Global Financial Literacy Excellence Center. Further, financial advisors will want to avoid using financial jargon as often as possible and find ways to tailor the information to a client’s life story to help keep them engaged in what many perceive as a boring topic4.
As we head into 2021, financial literacy should remain at the forefront as an important initiative among society, but especially among financial advisors. Bringing knowledge of this topic to your communities and clients will not only grow lasting business relationships but contribute to the overall betterment of society. By asking your clients the right questions, looking for opportunities to make a difference and being flexible, you can help make 2021 the year your clients realize financial independence when they need it the most.
Visit the MICPA’s Financial Literacy webpage to learn more about the association’s financial literacy efforts or to access resources to help you or your clients meet money management goals.
References
- Schwab-Pomerantz, Carrie. “COVID Showed Why We Need to Make Financial Literacy a National Priority.” Fortune. 24 Sept. 2020. Accessed on 13 Dec. 2020.
- Fox, Michelle. “Mellody Hobson, New Chair of the Starbucks Board, is a Big Champion of Financial Literacy.” CNBC. 10 Dec. 2020. Accessed on 13 Dec. 2020.
- Becker, Sam. “This Chicago School Teaches Kids to Invest by Giving First Graders a Portfolio Worth $20,000.” Grow. 26 July 2019. Accessed 13 Dec. 2020.
- Thomas, Myra. “Prioritizing Financial Literacy – How FAs Can best Educate Clients.” Forbes. 16 Nov. 2020. Accessed on 13 Dec. 2020.