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Financial Planning > Charitable Giving

Financial literacy is a growth business

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People want clear, unbiased financial advice. They don’t want to be deceived, and they don’t want to be sold. Our scars from the Great Recession are still fresh, after all, and we still remember the bait-and-switch pricing and other predatory tactics that used to pervade the credit card market as well as the shady mortgage lenders who robosigned home loans and the corporate crooks who took unnecessary risks, somehow making out like bandits in the end. 

Insurance agents, financial advisors, and other consumer-facing financial professionals would be well served to take this new-age distrust in the financial establishment into account when dealing with clients in this recovering economic environment. It will help you garner new clients, strengthen existing relationships and, ultimately, make more money.

Financial literacy promotes long-term planning

Financial literacy levels are low these days, and more than anything else, people just want to know if they are on the right track. With 60 percent of people lacking both a budget and an emergency fund, it’s clear that many consumers need a nudge toward the path to recovery. The financial professionals who take the time to teach prospective clients the basics of personal finance, rather than pushing for-profit products on them, will therefore make the biggest impact and will have the best chance at cultivating profitable long-term relationships.

Having a financially literate client base is important for a number of other reasons as well. Long-term revenue generated from such folks tends to be more stable, which is why credit card companies have been offering hundreds of dollars in sign-up bonuses to consumers who maintained excellent credit during the downturn. Financially literate individuals also tend to be more secure in their decisions, and are therefore less likely to feel taken advantage of by a financial professional and ultimately withhold repeat business.

More important than any of that, however, is the fact that financial literacy promotes long-term planning. When people can wrap their heads around planning for the worst, they begin to appreciate the value of an emergency fund, life insurance, fixed income annuities and, of course, health insurance. We can’t ignore the obvious connection between one’s understanding of personal finance and their perception of what is an appropriate value for insurance coverage either. People tend to be optimistic when it comes to how much money they will need in retirement, how long it will take to amass that sum, and what their years of future earning potential are worth. Becoming more in tune with the processes of budgeting, saving and debt repayment helps people conceptualize certain realties and ultimately makes them more amenable to taking out higher-value insurance policies.

The importance of planning, the role of trusted financial professionals, and one’s appetite for different types of insurance products all increase as consumers near major life events like buying their first home, starting a family and ultimately retiring. Financial literacy comes into play here as well, as many consumers have in recent years delayed such economic maturation in the face of an uncertain financial landscape.  

For example, the median age at first marriage was 29 for men and 26.6 for women in 2013 – 27.5 and 25.5, respectively, in 2006. Considering that high-value insurance policies don’t tend to come into play until after people start a family, giving people the financial confidence to get married and advance in life has the potential to unlock a lot of value for financial professionals.

Connect with customers & complementary professionals

Ultimately, your ability to use financial literacy as a means for development will depend on finding the right types of prospective clients and fostering a relationship with them.

Q&A websites offer one of the best ways to interact with potential customers, and recent SEC guidance enables life-health professionals to become active on those sites even if they are registered financial advisors and the sites contain reviews. Financial professionals can also partner with complementary professionals in the space to better serve the needs of their target audience. For instance, a health insurance broker could team up with a local financial advisor or credit counselor in order to host financial wellness events and build their brands.

So, build a presence on social media as well as in the local community, and focus on education rather than outright sales. You’ll surely reap the rewards in the long-term.


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