Connecting with Clients Through Financial Literacy
• Lauryn Williams • September 13, 2021
Financial education is at the heart of planning. Financial professionals who make a point to educate their clients on personal finance topics, as well as their own financial situation, will make a greater impact in their clients’ lives and have better planning relationships.
Planning is all about understanding what clients already know, teaching them what they need to know to stick to their plans, and helping them see why they need to take certain actions in pursuit of their goals.
Everyone has an emotional tie to money and its role in their life. Educating clients about their options, their plans, and how to achieve their goals is a powerful way to connect on a deeper level.
The Power of Financial Education for Clients
Over the last several years, I’ve built out niche expertise in student loan repayment. I work with a lot of high-earning individuals who have accumulated significant amounts of student debt. I’ve learned there is a strong emotional attachment to the debt that’s looming over a person’s head—that burden is lifted the moment a clear plan to address it is in place.
When a client understands their options, their financial situation, what will work best for them and why, the anxiety of uncertainty is eased. When they can see they can still pay off their loans and then have money for a down payment on a house and money to put in a 401(k), there’s a huge sense of relief. Once they know this, they don’t have to worry about the unknown, they just have to worry about sticking to the plan.
This is a truly powerful moment for clients, and it comes from teaching them everything you can about the path forward and their unique financial situation. This isn’t limited to student loan repayment, of course. Any financial professional can leverage their expertise to make a deeper impact for their clients.
Relationship Building Through Financial Education
When you teach someone something they didn’t know before, you’re demonstrating your value as a financial professional. For me, when clients realize they’re learning something to their advantage, they perk up and they’re very interested in what I have to say. They’re highly engaged in the planning process when they’re learning. At the same time, I’m reinforcing my expertise.
When they know what they’re saving for and working toward, they have direction. Many clients may have a natural discipline to save and invest, but without the educational component, without understanding their plan, they don’t have direction. A greater understanding of a plan and how it brings them to their goals is a powerful motivation.
Once people understand their plan, and they know it’s created by a financial professional they can rely on, they’re excited to start implementing the changes, to do the little things that help them reach their goals, and to start seeing the other areas of their life come together.
Educating clients empowers them to discuss their finances and take control of their financial situations—something they deeply appreciate. Through the education a financial professional can offer, clients gain the knowledge, resources, and direction they need to achieve their most important goals.
Engaging with the Plan
Clients are far more engaged with their plans after they’ve been educated on all the aspects that go into it and taught how they can achieve their goals. Once they have confidence in their plans, and a sense of control over their own destiny, they have the courage to take an honest look at their financial life and put in the work to make positive change.
Money can be difficult to talk about, and many people avoid it. But empowered clients are eager to review their finances. I even find my client meetings are far more efficient after clients have a better understanding of their financial situations.
They’re typically reviewing their progress to goals on their personal financial website and coming to meetings with pointed questions about what to do next. Far less time is spent explaining basic financial concepts to them. We can focus on what’s most important to them instead.
Making an Impact with Financial Literacy
There’s generally a low level of financial literacy around student loans and repayment options, which means there’s a huge opportunity in this area to make an impact.
I recently spoke with a client who was resigned to the fact that their loans would take over 20 years to repay. They had no idea their non-profit work and loan types made them eligible for public loan forgiveness programs. Once I educated them on these programs and how they could go about paying their loans off in just 5 years, their excitement was through the roof.
That may be an extreme example, but in any area of low financial literacy, financial professionals can step up to the plate and be a trusted guide for their clients’ financial lives.
I tell my clients when we first meet that my goal is for them to go out with their friends and be the one person who can speak intelligently and confidently about their finances in a positive light. A lot of people will brag about finances in a misguided way. I want my clients to be able to speak to why they’re using ETFs in their portfolio and how they strategized to pay off their loans sooner than anticipated.
Understanding a financial plan and its components breeds financial peace of mind. Clients that know where they’re headed, and why they’re taking certain steps to get there, can be confident in the direction of their financial life.
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