Lessons for Advisors From a Bus Tour

The American Century/Investopedia tour, covering six cities in five states, found that advisors should focus more on financial planning than portfolio management to attract clients

The Financial Coach in St. Louis. The Financial Coach in St. Louis.

Investopedia and American Century Investments wanted to spread the word about financial planning while also learning about the financial fitness of the typical American consumer, so top executives from each firm plus licensed reps of American Century embarked on a bus tour across much of the Midwest last month.

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The Financial Coach, a 45-foot-long tour bus, stopped in six cities in five states, targeting local events attracting big crowds, such as the Chicago marathon, Indiana University Homecoming and Financial Planning Association annual meeting, in Nashville, Tennessee.

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What its riders found after talking with thousands of people, including more than 2,200 who took a three-question financial quiz, was how little people know about financial markets, investing and saving for retirement even though across generations they said retirement planning was their number one financial issue. Over 50%, for example, didn’t know the definition of a bull market or that they should have saved for an emergency fund. Those under 40 were also concerned about paying off their student loans.

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Despite the focus on retirement, many people had no idea about how to calculate how much they need to save for retirement or the size of the company match for their 401(k) plan.

“Many know they have a 401(k) match but they don’t know the details about it,” said CEO David Siegel of Investopedia, who was on the tour.   

More specifically they don’t know if they’re saving enough to take full advantage of their company’s match. Siegel said he was positively surprised, however, by how much retirement is on people’s minds, including the minds of young people.

But those same people who waited in line to talk with reps on the tour bus about their financial situation won’t necessarily seek out the counsel of financial advisors, said Jay Hummel, American Century's senior vice president of direct sales and service, who was also on the tour bus.

“Advisors need to understand that to get people to interact with their firms,” said Hummel.

They need to understand that “the world where people want to delegate everything to advisors continues to get smaller and smaller,” said Siegel. “People want to get educated to take charge and not let advisors handle everything.”

They want advisors who work on financial planning and educate their clients about different options rather than advisors who just manage portfolios, said Siegel.

In addition to Chicago, Nashville and Bloomington, Indiana, the Financial Coach visited indianapolis; Kansas City, Missouri; and Columbus, Ohio.

 

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