Jaclyn Wu explains why financial literacy sessions teach clients the importance of spending
Jaclyn Wu has a strong passion for financial literacy, a craft she has developed over a decade of experience working with clients. But Wu often finds herself encouraging clients to spend, not save, a conundrum rarely felt among most advisors.
Wu works primarily with the sizeable Chinese-Canadian community in Vancouver, and says the financial literacy needs are vastly different from other investment communities. According to Wu, Chinese culture emphasizes saving, but often glosses over how to spend cash to keep it active.
“It's about cultural differences. I can say that Chinese people love to save. Saving is usually the priority in their financial goals,” said Wu, director at Monic Financial. “I am actually teaching people how to spend, and that's interesting because it’s different from the story that we usually hear.”
During her financial literacy sessions, Wu says she outlines why passive income strategies and weighting in private markets are essential to her clients and their portfolios. She says this is often a contradiction to the financial traditions of her client base, though they usually have no complaints when she provides results.
“In the Asian culture, they love to save and don't know how to spend money. So when you talk about a portfolio, I usually divide it into two money concepts,” she said. “One is for growth, for your asset to grow, and then the other one is, is an asset for you to create passive income. When we talk about income, they basically don't have that side of the knowledge or the view on how you spend the money.”
This emphasis on passive income and alternatives has proven a successful strategy amid this year’s high volatility and uncertainty in public markets, according to Wu. These recent downturns have only solidified Wu’s belief that the 60/40 model is no longer the way forward, and have proven to clients the need to have allocation in private markets. She says that by giving financial literacy events, she can offer clients a more comprehensive overview of what their portfolio strategy looks like and why.
“They also need to learn how to create different sources of income from different investment in vehicles to give them protection. When market downturn and the public side is not working well, then the private side can actually give them another hedge on income,” she said. “So these income related financial topics are quite interesting to them, and they are willing to change their style in a way that they are now understand the need to spend.”
Wu began offering financial literacy courses over a decade ago, with her first event attracting a humble ten attendees. This experience gave her the confidence to expand her financial literacy teachings, which included radio and has now grown into podcasts and webinars. She offers both one-on-one sessions and group courses to clients, while also sending free online material to clients for their background knowledge.
Investing in REITs to avoid some of the volatility from public markets and secure passive income has been a key strategy in Wu’s portfolio construction. She also emphasizes her engagement with clients’ insurance strategies, where she aims to ensure annuity for estate planning.
“Private REITs can provide very steady passive income,” she said. “They have long track record, but then we focus mostly on first lender or second lender, we don't touch any third lender or construction lending. It's a strict criteria on how we generate passive income. And on the insurance side too, we will have annuity, all these guaranteed protections for estate planning purposes. So this is combination of different tools.”
Clients have given overwhelmingly positive feedback to the sessions according to Wu, who says many are excited to adopt a novel strategy. She also says that the breadth of financial literacy options for Wu’s clients is also helpful in attracting new clients. She says that by engaging clients with these services, it develops better long term relationships with her clients, which inevitably leads to an increase in referrals.
“The biggest feedback that I got from them is, ‘I should have known you earlier,’” she said. “As long as your money concept strategy that you use is in compliance, driving for results and you're, you're maintaining service, you can deliver investors their needs – that’s the most important part. Then that will build a long term relationship, which will drive more referrals.”
