When should an advisor become an educator?

Financial Literacy Manager explains why advisors should play a role in educating the next generation of their clients' families

When should an advisor become an educator?

November is financial literacy month, and Stephanie Dean is using the occasion to focus on what young people know, and don’t know, about their finances. Dean is a manager in financial literacy at RBC Wealth Management and is advocating to parents, professionals, and young people about the importance of a financial literacy education at almost every stage of life. She believes that Canadian financial advisors can play an essential role in delivering elements of that education to their clients.

Dean believes that a financial literacy education should begin ‘as soon as kids can point out something at a store,’ but thinks that advisors can step in at crucial junctures in the lives of their clients’ kids. Advisors can offer a professional perspective and level of seriousness that many young people will listen to. They can also help parse through the veritable ‘information storm’ of financial influencers and online noise that kids are subjected to. Dean speaks from some experience here, having brought her own advisor in to help with her kids’ financial literacy education.

“My son is very keen on understanding investing, trading, and specific securities. While I can give him the basics, by introducing him to our family’s advisor my son was able to learn more and feel like he was in this very important meeting, in an office with a professional who was able to communicate things in a way that would be different than I would have communicated as a parent,” Dean says. “It’s awesome for my son to have that sort of external role model outside of the family…and I, as a client, feel grateful to my advisor for taking that time.”

Dean notes that financial literacy education is a collective effort. Young people will glean pieces of knowledge from their parents, from school, from the internet, and from their own research. The trouble, then, is that while they might have strong understandings of certain areas they lack a grasp of others. Those information gaps can sometimes lead to dangerous assumptions or bad decisions, but advisors can help fill those gaps for their clients’ kids.

Those gaps are also easy to exploit. Less well-intentioned actors, on TikTok, YouTube, or other strange corners of the internet have made millions promising quick returns to young people and costing them significant amounts of money. Even the influencers peddling accurate information may be doing so without appropriate context. Dean notes that a teenager in Canada might not know that they social media finance account they follow only posts information relevant to American investors.

Of course, the internet is a hugely valuable resource for financial literacy education. Especially for young people as finding information independently can be a source of empowerment. However, as it becomes harder to differentiate between truth and misinformation, having a trusted authoritative third party you can turn to when a question needs answering or an idea needs validation can be valuable. Dean believes advisors can play that role.

But why should advisors want to be educators? Dean explains that, aside from being the right thing to do, it can go a long way towards preparing their practices for the intergenerational wealth transfer. Establishing a professional relationship with your clients’ kids means establishing a rapport with their heirs. Advisors can become the trusted point of contact to the second generation, and make sure their current clients are happy with them. Dean cites her own example, noting that since her advisor took the time to help educate her son, she feels her relationship with that advisor is now “locked in.”

Advisors can begin to offer their educational services through broad communications channels. Newsletters, emails, and check-ins can come with reminders about what an advisor can offer in terms of financial literacy education. On a more targeted level, too, advisors can offer to step in around key milestone’s in a client’s child’s life, whether it’s their first job, or when they graduate from university. Dean notes that the best read of when to step in should stem from a strong understanding of the client relationship.

While advisors can provide a huge degree of value, educating young people about financial literacy, Dean notes one common mistake that advisors can make: information overload.

“We each get so excited and enthused that we want to tell people everything in one sitting,” Dean says. “I’m guilty of this as well. I often need to remind myself to listen first, ask some open-ended questions, and do lots of check-ins with the person I’m speaking to. I think as advisors do this work they need to take time to listen and give information in short pieces.”