Research reveals that Canadians rely heavily on their financial advisors for financial education. So, if you have not incorporated client education into your practice, you should begin doing so as soon as possible.
“Advisors are a trusted source, so they need to have some strategies in place for educating their clients,” says Perry Quinton, vice president of marketing at the Toronto-based Investor Education Fund, a non-profit organization that provides information to help consumers make better financial and investing decisions.
Furthermore, in a report released this past February, Cana-da’s Task Force on Financial Liter-acy concluded that financial advisors should play a prominent role in educating Canadians on financial matters.
Says the report: “It is important that front-line staff and advisors are adequately trained to help their clients grasp financial information.”
But don’t plan to adopt a “one size fits all” approach. Education strategies vary — and must be customized to the client you’re advising. Individual clients learn in different ways, depending on factors such as age, base of knowledge and learning style.
You shouldn’t expect a single brochure or a well-rehearsed spiel to resonate with all clients. You’ll need more than one education strategy.
“Personalize the education,” says Terri Williams, vice president of editorial services and production with Toronto-based DundeeWealth Inc. She recommends getting to know your clients as well as you can in order to customize your approach. “Respond in a relevant and understandable way for each of your clients.”
As you get to know your clients, Williams says, try to determine their individual learning styles. There are three general types of learners: visual, kinesthetic and auditory.
Says Williams: “You have to take the cues as to what type of learner they are.”
Here’s a closer look at the different types of learners and how you can best connect with them:
> Visual Learners are the most common, making up about 70% of the population. These individuals process information best when they read it or see it organized in the form of a chart, graph or image.
Signs of a visual learner include taking notes during meetings, occasionally closing the eyes to try to visualize or remember something and asking for written information about products and accounts.
For these clients, consider using educational brochures, PowerPoint slide presentations, videos or websites that incorporate a variety of visual elements.
> Kinesthetic Learners are active learners; they learn best by participating in an activity rather than by listening or reading. Individuals in this group, who make up 20% of the population, are most likely to understand and remember something when they experience it themselves.
You can usually identify a kinesthetic learner as someone who is active and animated, often speaking with hand gestures — and someone who relates the concepts they learn to real-life examples involving them or their friends.
When educating a kinesthetic learner, use hands-on tools such as worksheets or calculators as much as possible.
“You would actually hand them the calculator and get them to do the calculations,” explains Williams. “They actually need to be actively learning.”@page_break@> Auditory Learners are the least common, making up about 10% of the population. They are able to comprehend concepts simply by listening.
If a client often reads materials out loud or repeats concepts back to you, he or she is likely to be an auditory learner.
When working with an auditory learner, focus on having meaningful dialogue. Listen to the client’s questions, thoroughly explain concepts and tell stories the client can relate to. Educational seminars are likely to resonate well with this client.
Some people have a learning style that incorporates all three types, although one style usually is predominant.
Determining your clients’ learning styles can be as simple as asking whether they’d prefer to see a brochure, sit through a seminar or work through some calculations. There are also short quizzes available online that you can have clients complete to identify their learning style.
Consider using educational tools that appeal to more than one type of learner. Beverley Moir, senior wealth advisor with ScotiaMcLeod Inc. in Toronto, directs her clients to educational videos on her website that combine visual and audio elements. Moir expects videos to continue gaining traction as a powerful educational tool for the financial services industry.
Also take into account your clients’ ages when educating them on financial matters.
“Depending on the age group,” explains Quinton, “they favour different types of strategies.”
People over the age of 35 typically prefer to consult an expert or hear real-life examples, according to research from the IEF. Thus, they’re more likely to rely on their advisors as their main source of financial information.
In contrast, younger clients typically will seek out multiple sources of information. In addition to consulting their advisors, they’ll also seek advice from their peers and do research online.
To help younger clients find accurate information, provide them with a list of reputable educational websites and resources, Quinton suggests: “Make a point of noting the kind of information that’s out there.”
If possible, customize these resources to the specific client. If your client is an auditory learner, for instance, direct him or her to online videos. If your client is a kinesthetic learner, point him or her toward online tools and calculators.
It’s also important to gauge your client’s existing level of financial knowledge.
Some clients will have a solid understanding of basic concepts but will be interested in learning about complex products such as wrap accounts and funds of funds. However, many clients are unclear on even fundamental financial topics such as asset allocation.
When in doubt, offer information before your client asks. Even if questions don’t arise, there’s a good chance some clients have not fully comprehended the concepts you’re discussing — and they are likely to appreciate some clarification.
“I suspect that a lot of people don’t like to ask questions,” Quinton says, “because they don’t feel comfortable.”
Moir finds that her clients appreciate when she spends time educating them on complex topics without forcing them to ask tough questions. And that appreciation translates into client retention.
“I give them information that I think will be helpful to them,” she says. “The majority of my clients, I would say, are with me partly because they like that
approach.” IE
Clients rely on you for education
Improving your clients’ financial literacy should be a part of your advisory practice
- By: Megan Harman
- August 29, 2011 November 6, 2019
- 14:31