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How Advisors can Build their Clients’ Financial Literacy 

By Emily Reed, CEO & Co-Founder at HeyAdvisor

Financial literacy is a buzzword being used more and more frequently in the advisory world, but what exactly does it mean? In the simplest terms, financial literacy is the ability to both understand how money works and how to make decisions about how to use it. It’s not only about understanding concepts such as compound interest or specific financial products like stocks. Rather, financial literacy involves understanding your current situation and future goals so that you can take appropriate action for yourself or your family. 

Many Canadians don’t have a comprehensive understanding of how money works, or how they can effectively reach their financial goals. The bright side is that this is a big opportunity for you as a financial advisor to step in and provide this knowledge and expertise. Incorporating financial literacy into your relationships with clients strengthens the advisor-client bond, builds trust, and sets your clients up for success. Here are a few easy things you can do today to build your clients’ financial literacy. 

Involve Your Clients in the Wealth Planning Process

The financial literacy of your clients can be improved throughout the wealth planning process. There are many opportunities along the way to explain concepts and lay out the reasons why you as an advisor have counseled your clients in the way that you have. Although it may feel easier or faster to just give advice and make recommendations instead of engaging them in the decision-making process, it is always in the benefit of the advisor to engage their clients as a motivational tool to stick with the decisions made, and to have a greater level of insight for future decisions as well. 

Simple ways to do this would be to ask open-ended questions. Try to uncover more than what you need to know from a KYC perspective – this can also uncover other possible opportunities that you weren’t even aware of! Then, simply explain why you are recommending a service or product. Think of every wealth planning opportunity as a chance to build a strong foundation of financial literacy. 

Send Educational Content 

If you want to increase your clients’ financial literacy, you should send educational content – especially content that can help them contextualize the work you are doing with them at the time. You can also email your clients regularly with information on topics such as:

• Investment Basics 
• Risk Management Strategies 
• Estate Planning Considerations

And these are just the beginning. When it comes to educational content, there are a few key things to keep in mind. Whenever possible, you should send visual materials. A lengthy article about a wealth planning topic will likely be skimmed or left unread and you will lose the opportunity to add value. Instead, consider a short video (two minutes or less is a good target to aim for) that is entertaining and informative. You will be surprised by the difference it makes. It’s important to make sure each piece of content is relevant to your client and related to the life event they are experiencing. For example, if they are raising young children, sending a piece on ways to protect your kids financially would be well received. The more relevant the content, the more impactful it will be for your client. 

Building your client’s financial literacy can help increase your client satisfaction, motivate them to act on your advice and enhance the overall financial success and security of your clients. Involving them in the wealth planning process and sending them educational content are two easy ways you can incorporate this into your business. Over time, you will notice the difference, and you will find that an educated client is an empowered client – making them easier to work with, more likely to be successful in growing their wealth, and ultimately a more valuable client for your practice.

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