Financial literacy for your clients helps you both win
There is good news for financial advisors! Research recently released by Cerulli shows an increased demand for financial advice among US investors.
- The “advised” investor segment grew from 35% in 2009 to 47% in 2023.
- The “self-directed” investor segment fell from 41% in 2009 to 24% in 2023.
- 63% of investors expressed a willingness to pay for advice—up from 38% in 2009.
- Interest in personalized financial plans increased to 54% from 38% in 2009.
How can advisors best position themselves to respond to the increased demand for advice within the competitive wealth management marketplace?
One way is through client education. Advisors who offer some form of investment education to their clients benefit both themselves and their clients.
4 ways t0 support your clients' education:
Supporting Financial Literacy
Research done by FINRA’s Investor Education Foundation found that there is a strong correlation between financial literacy and positive financial outcomes in the future.
This benefits both clients and their advisors. Improved financial literacy increases the client’s likelihood of reaching their long-term financial goals. Advisors benefit from higher levels of client satisfaction and loyalty.
Curate Information
Client access to information about investing has never been greater. However, the sheer volume of this information, its conflicting nature, and the use of jargon and technical terminology makes this mountain of information overwhelming for most clients.
Advisors who help clients cut through the confusion can bring clarity and peace of mind to their clients. This, after all, is one of the primary benefits clients seek in hiring an advisor.
Establish Credibility & Transparency
In the process, advisors establish their credibility by cutting through the noise rather than bragging about credentials and experience in a self-promotional pitch. Bringing clarity and peace of mind also builds trust and deepens client relationships.
Educating clients on financial topics is also a form of transparency that benefits both clients and advisors. Clients see that their advisor is sharing information rather than hiding it, empowering the client to move forward with confidence and make informed decisions.
Promote Engagement
In this way, clients can become more active participants in securing their financial futures. This makes the advisor/client relationship more collaborative and helps clients share ownership of both the plan that is agreed upon and its eventual outcome. Clients are more able to set realistic and achievable goals and better assess trade-offs.
Ongoing client education increases engagement and can encourage loyalty and long-term partnership. The educational interactions create another touchpoint and further deepen the client relationship.
Educating clients is a concrete way for advisors to demonstrate their commitment to the client’s financial well-being. It is far more powerful than a hollow statement on your website or an empty tagline.
Empowering Clients Doesn’t Reduce Your Value
Lingering concerns that educating a client on financial topics may lead to clients leaving to do it themselves are misplaced. In fact, a deepening of the relationship is more likely as clients come to appreciate the expanse of your knowledge and the incredible complexity and subtlety of the financial markets.
As clients understand more about financial markets, they may be less likely to become fearful or abandon their investment strategy in times of market turbulence. They may also be less likely to be led astray by misinformation or drawn toward harmful investment ideas. There is no shortage of low-quality investment advice in corners of the internet.
A well-designed client education program can deepen client relationships, improve the client’s experience, and set an advisor apart from competitors. The more clients know about financial matters, the more they will grasp the value of your services.
They may even tell their friends, leading to more referrals and a growing, thriving practice.
How Does GeoWealth Help Advisors Educate Their Clients?
RIA firms that work with GeoWealth get access to an ever-growing library of educational materials written specifically for investors and home offices that could use a brush up on topics such as portfolio rebalancing, expense ratios, tax alpha, and more.
When your client comes to you seeking clarity on a new or complex investment concept, you’ll be able to quickly access these materials. Plus, you have the opportunity to white-label and PDF any of these well-researched explainers.
Highlighting Popular Educational Articles:
EXPLORE THE LIBRARY:
Investor Education Library ➝
More than 30 article covering essential investment concepts, from asset allocation to portfolio rebalancing to direct indexing. This library was built to help you prime your clients on different asset classes, investment strategies, and financial terms that you may use.
The information contained herein does not constitute investment advice or a solicitation. This article is for dissemination of general information only. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results.
