What worked — and what didn't — in advisor's quest to boost financial literacy

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As an advisor with 12 years of experience, I’ve tried many ways to connect with prospects and clients. For years, I offered presentations to small business owners and individuals on personal financial planning. The events were well attended and I generally received positive feedback, but they were ultimately unsatisfying — I could only share a limited amount of information in one hour.

I wanted to offer a different experience. After research far and wide, I found my answer close to home. I went back to school.

I started by approaching the continuing education department at York College in New York City, where I offered to teach a course for adult students on financial skills such as assessing cash flow and debt management. I was thrilled the school accepted the proposal and I started in January 2015.

When I asked them to create a budget, they weren’t too thrilled about it.

My first-ever Personal Finance and Investing class consisted of pre-retirees between the ages of 35 and 60. To help them feel at ease, I introduced myself as a planner and gave a summary of how I ended up in the industry. Then I assessed their knowledge. Several had retirement plans offered by their employers but they did not know what was in those plans.

Then I suggested some questions we need to ask ourselves before we make any investments. What are the goals? How long will it take to reach them? How much money do we need to accomplish those goals? I was surprised to see that many students underestimated the amount of money they would need in retirement. From my previous presentations, I’d known many Americans lacked financial literacy. Because I’d have my students for an extended period of time, I was finally in the position to really help.

It was smooth sailing that first day as students took about an hour to figure out their financial goals. But when I asked them to create a budget, they weren’t too thrilled about it. They thought budgeting would force them to pinch pennies and live a miserable existence. I got over their resistance by assuring them that a budget would help them make spending decisions and I stressed the importance of tracking income and expenses. The attendees were relieved to know that a cup of coffee or a trip to the movies wouldn’t derail their financial plan.

After that, I explored the basics of a stock and a bond. That’s when my students started to get excited. The idea that they could share in the company’s revenues intrigued them. They also liked the idea of lending their money to corporations and governments. From there we moved on to mutual and exchange traded funds. I used the following analogy. “A fund is like a carton of eggs. The fund is the carton and the eggs are individual stocks or bonds.” They immediately understood.

Most of the students were concerned about market downturns and were conservative. To make them feel more confident, I explained how diversification could mitigate risks. Toward the end of the four-week course, the students signed up for an online stock market simulation game. They looked forward to following some of their favorite companies. I also provided them with a reading list so that they could study personal finance in depth.

On the final day of class, we discussed the differences between financial advisors, financial planners and investment advisors. We delved into the range of advisory services and products that they offer and how they are compensated. I brought in prospectuses to show the students how to identify mutual fund fees and expenses. We also discussed commissions and how tax planning is essential to managing portfolios.

I have taught this class for two years to more than 100 attendees and I often follow up. Some students have hired fee-only financial planners and others decided to do it themselves. It is always satisfying to hear about their successes since taking my class. As a financial planner, I have a responsibility to empower individuals so that they can create positive outcomes through financial literacy.

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Pro bono Client communications Financial literacy Retirement planning RIAs Levar Haffoney Fayohne Advisors