5 Financial Literacy Opportunities to Elevate Your Practice

Financial literacy — the ability to understand and use financial skills — is unfortunately pretty lacking in the United States, with studies showing that only 34% of Americans would be able to correctly answer basic financial literacy questions.¹ What’s more, this number goes down to just 17% among those 18 to 34.¹

This lack of financial understanding, while challenging for our country, presents a significant opportunity for financial professionals, as you have the skills and knowledge to educate your clients — and potentially save them millions of dollars as a result. In fact, according to PR Newswire, Americans lost $415 billion in 2020 due to poor financial literacy.¹ What if those individuals had had a knowledgeable financial professional guiding them? Perhaps the outcome would have been different.

There are multiple benefits to helping your clients become financially literate.

1. You’ll have clients with good financial habits. By helping your clients become more financially literate, you’ll end up with clients who have great habits that result in potentially more assets to invest — and thus more to help them pursue their goals. Marc Zabicki, CFA^TM and chief investment officer of LPL Research, says, “When investors obtain a greater sense of financial literacy, it’s easier for them to establish good financial habits, like consistently saving a portion of their paycheck each month and adhering to a budget. This sets them up for success when working with you.”

2. You’ll be working with clients more likely to stick to the strategy you create for them. When clients don’t fully understand market volatility and long-term investment strategy, it can make them jump at every market opportunity or blip — which can blow up the strategy you so thoughtfully created for them. But a financially literate client is much more likely to adhere to your strategy. “Financially literate clients are more likely to withstand the ups and downs of the markets while maintaining their focus on a single set of objectives,” says Marc. “In addition, these types of clients are often more able to accurately express their goals, converse thoughtfully with you, and understand the financial strategy you set for them.”

3. It’ll set you up to provide additional value. If you have clients who aren’t financially literate — or who have some level of financial understanding but don’t necessarily understand market cycles and investing — you have the opportunity to further educate them. By helping them understand what it means to invest for the long term, and how their saving and investing habits today can impact their goals for tomorrow, you’re teaching them to thoughtfully build toward their goals and increase their assets over time.

4. It’ll help you connect with the next generation. When you help your clients become more financially literate, you’re deepening a relationship that can be extended to their children and grandchildren. As a result, they may turn to you years down the line when they inherit your clients’ assets or need financial advice, setting up the future of your practice.

5. It’ll help you connect with your community. With such low levels of financial literacy across the country, it’s likely your community would welcome educational opportunities. Offering learning opportunities to others outside your client base not only helps your community, but it can also help you build relationships with new, potential investors. Teaching financial literacy courses establishes you as a financial specialist in your area and can organically lead to new clients.

Financial literacy tools available at LPL Financial

At LPL Financial, professionals have access to multiple resources that can help them educate their clients and families, including a new, free, financial literacy curriculum designed for high school students.

Financial literacy curriculum for teenagers: LPL contracted with the Warren Buffett Reading Group to build a curriculum specifically created for financial professionals to use with young people in their client base and community. The curriculum, a series of six courses, is inspired by the writings of Warren Buffett and created by a team of Harvard Business School alumni. It was designed to equip teenagers with a solid understanding of business concepts and foundational knowledge of investment principles.

Financial professionals can use the pre-packaged materials — a teacher’s guide, introductory videos, and full curriculum — to teach a course for their clients’ children or grandchildren, or even for young people in their larger community.

LPL Research materials: LPL Research provides a wealth of investor-approved materials at all levels that financial professionals can use to educate their clients. Financial professionals can forward clients the materials, send a regular newsletter with information from the materials, distribute them in client meetings, or even use them as source documents to create their own client education. “Sharing LPL Research documents on a regular basis will give your clients a continual education of what’s going on in the world of finance, which will raise their level of understanding,” says Marc. “They’ll also gain a better understanding of market cycles and what to expect when investing.”

LPL Research has multiple items you can use to educate clients. Here are a few of the most popular:

• Outlook — A recap of the economy and market to date, including a year-end forecast.
• Weekly Marketing Commentary — An overview of the markets with insights and perspectives from the week.
• Econ Market Minute video with Jeff Roach, LPL’s chief economist — A weekly micro slice of the macroeconomy in approximately three minutes.
• Market Movers blog — The hottest topic of the day, including bigger trends, market updates, the latest government data releases, and more.

Discover more about LPL Research and their client-approved materials on LPL.com.