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October 17, 2012 at 07:01 AM
First, let’s give kudos where they’re due: to new NAPFA chairwoman Lauren Locker, former NAPFA chairman Ron Rhoades, and project leader Ben Lewis, for the recently released “infographic” titled: “Why Financial Planning is Important” (see Melanie Waddell’s Oct. 5 story “NAPFA Illustrates Dire State of Americans’ Finances” on AdvisorOne). It’s a big step in the much-needed effort to educate the American public about the growing need for sound financial planning and client-centered financial advice in our increasingly complex world. With that said, the NAPFA infographic also offers valuable insight into the challenges of consumer financial education, and hopefully, will serve to provide some valuable lessons to those who embark on the next steps down that road.
While the NAPFA piece does a nice job of spelling out the types of questions that financial planners can help consumers answer, as well as offering a detailed description of the financial planning process (which, even though expanded to nine steps, somehow fails to include actually creating a financial plan), it also includes many of the classic mistakes that have rendered most previous attempts at financial consumer education less effective than they might be: statistics that are either confusing or simply not compelling, trade jargon that studies consistently show turn consumers off, and worst of all, parental-sounding directives that only serve to reinforce the reasons why most people don’t engage financial planners in the first place.
As for the baffling stats, here a few examples. “39% of US adults carry credit card debt from month to month.” So, that means that 61% of us don’t, right? I don’t know about you, but I find that somewhat encouraging. Along the same vein: “23% of Americans are not at all confident in having a comfortable retirement.” That means 77% of us are secure in our retirement. Really? If NAPFA’s point is that probably half of all Americans are deluding themselves about a secure retirement, it’s a good one, but still requires a bit more info to be convincing.
Then there’s: “40% of US adults are saving less than they did in 2011.” No kidding—with the U.S. and global economies in a extended recession I’m surprised the figure isn’t higher, and a bit puzzled about what NAPFA thinks even a good financial planner can do about that. And finally, “31.4% of all mortgage borrowers are under water.” So, we’re going to beat prospective clients up about that, too? Sounds as if NAPFA is training its members in some form of high finance with which I’m not familiar.
