Making the Financial Grade
To connect with prospective clients, an advisor offered one-hour lectures. Then he found a longer-lasting approach.
To connect with prospective clients, an advisor offered one-hour lectures. Then he found a longerlasting approach.
AS AN ADVISOR WITH 12 YEARS OF EXPERIENCE, I’VE
tried many ways to connect with prospects and clients. For years, I offered presentations on personal financial planning. The events were well attended and I generally received positive feedback, but they were ultimately unsatisfying — I could share only limited information in one hour.
I wanted to offer a different experience, and ultimately I found my answer close to home. I went back to school.
I approached the continuing education department at York College in New York City and offered to teach a course for adult students on financial skills like assessing cash flow and debt management. I was thrilled when the school accepted the proposal and I started in January 2015.
My first Personal Finance and Investing class consisted of pre-retirees aged 35 to 60. When I assessed their knowledge, it turned out several had retirement plans offered by employers, but they did not know what was in those plans.
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?
IN POSITION TO HELP
Not surprisingly, many students underestimated the amount of money they would need in retirement. From my previous presentations, I’d known many Americans lacked financial literacy. Now I was in a position to really help.
When I asked the students to create a budget, they weren’t thrilled about it. They thought budgeting would force them to pinch pennies and live a miserable existence. I overcame 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, we 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 this 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 students feared market downturns and were conservative. To raise their confidence, I explained how diversification could mitigate risks. Toward the end of the fourweek course, the students signed up for an online stock market simulation game. I also provided them with a reading list so that they could study personal finance in depth.
On the final day of the class, we discussed the differences between financial advisors, financial planners and investment advisors. We delved into the services and products that professionals offer and their compensation. I brought in prospectuses to show the students how to identify mutual fund fees and expenses. We also discussed commissions and the need for tax planning in 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.