Our business suffers from a reputation problem — yet we know thousands of advisors who positively impact their communities every day. Why is there a disconnect between perception and reality?
In a 2016 poll by the American Institute of Individual Investors, 62% of the respondents said they mistrust financial advisors. My own observation is that while the financial services world has a few bad apples — just as any profession — advisors want to help people. So how can we display that purpose?
Individual consumers often lack the confidence and knowledge to make important financial decisions, and this makes them vulnerable to those who would prey on them for financial gain. I see an opportunity here, a chance to help people take control of their financial lives.
To address this need, BNY Mellon Pershing has undertaken an initiative to encourage advisors to deliver personal financial education to schools in their community or their alma mater. We created a test partnership with EverFi to promote this engagement. EverFi delivers a broad menu of digital educational solutions to kids, with sponsorship from many financial organizations. Topics covered in this program include savings, banking, payment types, credit scores, financing higher education, renting vs. owning, insurance, taxes, consumer protection and investing. Over the past few years, high school learners increased their knowledge of financial issues by 75%.
Prior to undertaking the EverFi partnership, I helped my former school in Michigan’s Upper Peninsula to implement a financial literacy class for high school seniors. This idea has been replicated by many other advisors around the country. The results and the feedback have been tremendous — in fact, we heard directly from students in the program when nine teams presented their best ideas to Gladstone School’s superintendent, the lead teacher for the financial education program and me. Remarkably, three of the teams recommended that a similar class be created for their parents. Without a doubt, this awareness of the importance of financial literacy will help these young people take control of their futures.
More financial advisors are undertaking their own initiatives to create a better understanding of financial choices. Following are just three examples out of scores of initiatives that I have heard about. These programs do help the industry’s reputation, but none of these firms is doing it for bragging rights. They are on a mission to give back to their communities and to improve the lives of others who are less fortunate:
1. Bob Swift, the founder of TCI Wealth, created a foundation three years ago to provide financial education to young adults of moderate means. Called the Third Decade Program, Bob’s foundation has been funded by his wealth management firm. The students pay no tuition. Bob believes that an introduction to financial planning benefits young people as they enter the workforce. They can start to apply the lessons to their everyday choices right away. TCI delivers 10 hours of class, after which each student receives $1,000 for a Roth IRA. In April 2019 they had their 500th graduate of the program.
Now TCI wants to show other financial advisors how to deliver a similar experience in their communities. This is a personal passion of the TCI Wealth practitioners who view it as their responsibility to help individuals prepare for the many choices they will be confronted with on their path to a better financial life.