Financial Literacy, who's role is it anyway?

The pandemic may have triggered the Great Resignation; caused in part by wage stagnation amid rising cost of living, limited opportunities in career advancement, caustic work environments, lack of benefits, inflexible remote-work policies, and long-lasting job dissatisfaction. It also forced many Canadians to re-evaluate their finances and their understanding of money. It's the resource that could alter the confidence one feels about their future; if they had a better handle on it. Thus, directly affecting their choices, focus, and ultimate happiness.

 

For some, losing a job through no fault of theirs, caused major anxiety. For others, it sparked ideas how to leverage their new conditions to improve or completely alter their career path and ultimately their happiness. Regardless where you are on the spectrum, what happened in the last 3 years made you take notice of your financial resilience.

 

In my client-facing experience and in conversations with senior advisors in my firm, people who considered having financial literacy felt more empowered to seek solutions. As people shared their personal experiences working with a licensed advisor who exposed gaps and blind spots, also providing better understanding about money, made those clients feel more confident about their strategy for the future, due in part to understanding how the pieces fit together.

 

Who holds the responsibility for financial literacy? Are you leaving it in the hands of financial institutions to take care of you? Are you actively participating in your choices? What is your commitment to understanding financial independence and sticking with a strategy? Are you seeking the guidance of a professional? The ego can sometimes get in the way; if you attempted to figure it out yourself and caused more harm than good, you may be silently trying to get yourself out of the hole you dug.

 

If you consider yourself a savvy investor: does it make you financially literate? I've spoken with "savvy investors" who feel confident about their portfolio and its assets along with predictions and buy-hold-sell strategies, but don't have a strong foundation relating to protecting their wealth and their family against financial losses. I spoke with smart investors who had a practical grasp on their retirement plan, but ran out of time to manage it because of post-pandemic work demands. The demographics indicate that older investors are more apt to working with an advisor whether fee based or not. They enjoy the personal touch of someone being on the lookout for their best interest. They feel comfort speaking with someone about their changing lifestyles and adjusting their portfolio in-step with their goals. Younger, more tech-savvy investors enjoy the convenience of robo-investing and attribute the low cost of their platform of choice to the success they predict using this technology. They also have more decades ahead of them, creating a false confidence of having time on their side if they make mistakes. They have a preference for keeping "their hand on the plow" rather than feeling like they're giving control to another person.

 

The result of the pandemic affecting our economy is that more people are seeking knowledge and practicality. The challenge as advisors is to raise our standards, respond to the demand, and commit to our clients and potential clients as their financial coach: instilling discipline not just prescriptive advice. We have to show clients how to develop discipline over time with personalized planning, not only managing investments or portfolios. We need to invest ourselves in their lives, get to know their families, understand their goals, and ensure they know we're watching. This often creates accountability to navigate the straight and narrow and stick to their personalized strategy - keeping their focus on the goal. As independent advisors, we have to master our provider tools, choice of services, and solutions, review plans frequently, and adapt the strategy to clients' changing lives. In my opinion, this level of personalized service cannot be achieved through robo-investing. Will your platform know your wife is pregnant, you got a promotion at work, the roof is leaking causing the hardwood to buckle needing replacement upstairs, you're near you limit on your line of credit, and you need a getaway to warmer climats to take a break from all your hard work? How's that going to affect your lifestyle and readiness?

 

As a licensed financial specialists, I feel the responsibility is ours to spark the conversation, provide practical knowledge, and put ourselves out there to coach families and entrepreneurs on financial literacy. As the adage goes: "you can lead a horse to water, but....".

 

Once you know how this money game is played, it becomes a shared responsibility.