We’re all in the education business, no matter what our product is.
That is to say, our clients need to be continually taught the reasons for doing business with us. That’s the powerful reminder about selling from Robert G. Allen, a long-time investment advisor and author of several best-selling books on building wealth.
For those of us in the business of selling insurance and financial services, I find greater significance in Allen’s message. Yes, we need to always educate clients about features, benefits or what’s new and what’s improved. But if we are really in the education business and helping to make clients smarter about financial matters, then we’re also creating a more financially literate–and stronger–America.
Think that’s a bit of an overstatement? This year, Northwestern Mutual completed a study which concluded that those who work with a financial professional demonstrate greater financial knowledge than those who do not.
This past spring, Ben Bernanke, chairman of the Federal Reserve, provided testimony in Washington about the importance of financial literacy, “both as a source of better decision-making by consumers and as a means of improving the functioning of financial markets.”
In his testimony, Bernanke cited new research that looked at the link between financial knowledge and broader financial management skills. One study he referred to has determined that financial knowledge is the best single predictor of behaviors, such as budgeting, saving, and shopping responsibly, all of which translate into positive outcomes on credit bureau reports.
The Northwestern Mutual study examined how much the general population knows about subjects that compose a financial strategy: saving and investing, risk and protection, and retirement. Regarding the use of financial professionals, the study found that individuals who use the aid of an advisor tend to be more likely than those who make decisions on their own to have a greater financial “IQ.” Likewise, the study found that Americans who have an advisor are more likely to have short- and long-term savings goals than those who plan by themselves.
The Northwestern Mutual study further revealed that only a quarter of Americans work with a financial advisor, and Americans as a group score the equivalent of failing grades when it comes to their grasp of important financial matters like:
? The best long-term protection against inflation and other adverse market conditions (surprisingly, more Americans erroneously pick bonds over stocks).
? The insurance impact of leaving a job (most wrongly believe they will be able to take their group life or disability policies with them).
? The real costs of nursing-home care (most underestimate and fail to protect against these costs).