VANCOUVER — You can do well in your practice by doing good.
That was the chief take-away of a Sunday afternoon workshop on financial literacy hosted by the Million Dollar Round Table at its 2010 annual meeting.
“Most young adults have little understanding about basic financial concepts and products, including life insurance,” said Michael Weintraub, who holds the Chartered Life Underwriter professional designation. “That’s reflected in the fact that 68 million Americans have no life insurance. And most people who are insured have far less coverage than expert thinks they should have.”
Enter the financial literacy program, a joint initiative of the MDRT, Park Ridge, Ill., and the Association for Advanced Life Underwriting, Falls Church, Va. The two organizations have endorsed a curriculum, dubbed Smart Money, that was developed by the Federal Deposit Insurance Corp., for financial literacy outreach.
The Smart Money program consists of 10 teaching modules, each with a prepared 1-hour script, presentation and suggested exercises for the class, as well as participant hand-outs to ease the presentation of the material. Most of the modules have separate versions for both young adults and adults.
Among the 10 Money Smart Modules are Bank On It, which covers available banking services and how to build a positive relation with a financial institution; Borrowing Basics, which shows how credit works and how to determine readiness to apply for credit; and Money Matters, which shows students how to prepare a personal spending plan and indentify ways to decrease spending and increase income.
A central aim of the program, said the workshop speakers, is to bring young adults up to speed on key financial concepts and risk-based products, including life, disability income and long term care insurance; and to learn how to manage money responsibly.
Advisors participating in the joint program are trying to achieve that aim by bringing the FDIC literacy modules to the communities they serve. A number of producers, for example, are presenting the material to teenagers in high schools and colleges. In most cases, the audience is largely uninformed.
“Many high school and students in the U.S. have little knowledge of insurance and other financial products,” Weintraub said. “With this program, we’re trying to develop their financial literacy so they understand not only the basic risk products, but also how to use credit cards responsibly, how to balance a checking account and how to use ATMs.”
“If teen-agers become adults without having this sort of education, they’re not going to become clients of us,” he added. “And they won’t be able to support the economy properly.”
In conjunction with the FDIC materials, advisors also are using NextGen3, a DVD- and Web-based educational program sponsored by the nonprofit Life and Health Insurance Foundation for Education, Arlington, Va. Nextgen3.org features interactive games, quizzes and artificial intelligence; the DVD offers five video games that reinforce points contained in the material, plus a student workbook and lesson plans.
Hosting financial literacy workshops is not only of value as a community service, said Walter Katz, who holds the Certified Financial Planner designation. By establishing their volunteer credentials and making a name for themselves among key constituencies, advisors also help to distinguish their practices, he said.
After Katz introduced workshops to high school students in Houston, his firm won the business of a 501(c)(3) community service organization to institute a 403(b) retirement plan for the organization’s employees. The organization initially favored another financial services firm but then switched to Katz’ practice because it was impressed with the volunteer initiative.
Katz noted also the financial literacy program’s value as a tool for individuals with special needs. Among them: People with physical or mental disabilities, who tend to rely disproportionately on government programs, such as Medicaid, to fund services required for daily living.
“These [special needs] individuals do not have the luxury of procrastinating and oftentimes finds they have little resources with which to educate themselves or their families on how to create wealth outside government benefits, charity or inheritances,” he said. “While these financial strategies may be appropriate, our goal is to insure that the special needs people learn how to develop confidence in their own abilities and to feel financially empowered.”