Financial Literacy Month: Do Your Part to Educate and Motivate

April 11, 2016 8:00 AM
The American College of Financial Services

This year marks the 12th anniversary of Financial Literacy Month. Observed each April, Financial Literacy Month marks an opportunity for financial services professionals to make an impact on their clients and the public at large by alerting, educating, and motivating them to establish or update their financial plans, estate plans and planned gifts.

What is Financial Literacy?

According to McGraw Hill Financial, Inc., financial literacy is “the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it, or how that person donates it to help others.”

In other words, financial literacy means having the knowledge and skills to confidently make smart financial decisions.

Why is Financial Literacy Important?

The Boston College Center on Wealth and Philanthropy reports that approximately $59 trillion — divided among heirs, charities, estate taxes and estate closing costs — will be transferred from 116 million American households from 2007 to 2061. This reallocation of assets has been referred to as the “greatest wealth transfer in history.”


Financial literacy is critically important in this era of transferred wealth. Yet too many people remain financially illiterate and resort to making important life decisions based on information gained from non-experts and fragmented sources.

Without proper finance and estate planning, a “significant amount” of the assets affected by the great wealth transfer will be wasted, The Financial Awareness Foundation reports. This means that assets might be transferred to the right people or organizations or the assets may not be used to the benefactor's intent.

In the financial services profession, it can be easy to take financial literacy for granted because so many of your peers and colleagues are highly financially literate.

However, your clients are most likely unfamiliar with the terms and concepts financial services professionals use every day. Remember, even though the U.S. is among the richest countries on earth, it ranks 14th in financial literacy. Keep this fact in mind as you are serving clients.

As a financial advisor, it’s important that you help clients understand financial planning terms and fundamentals to ensure meaningful conversations about this important topic.

What is Financial Awareness Month and Why Does it Matter?

The Financial Awareness Foundation calls the lack of public financial awareness an “epidemic.”


Yet, the group says there is a solution: education.

“There is a real solution to this lack of financial awareness and financial literacy epidemic that revolves around better educating the general public, financial service and nonprofit professionals to the essential principles to smart personal financial management while motivating them to take appropriate actions,” The Financial Awareness Foundation said in a statement. “People need access to better personal financial management tools and information, to communicate and work more effectively with their financial advisors, and to make better every day informed money decisions.”

Through Financial Awareness Month, financial services professionals have an opportunity to educate their clients and the community on why financial literacy is so important.

If you or your organization is in the position to do so, consider publishing financial and estate planning content on your website and newsletters; and encourage your company and associates to host or participate in community workshops and information sessions designed to increase the financial literacy of the general public.

Final Thoughts on Financial Literacy

Running out of money is a scary thought, but running out of money during retirement is even more harrowing. Yet, as people live longer, making retirement income last to the end of life is a growing challenge for financial services professionals.

While April is Financial Literacy Month, The American College of Financial Services is committed to helping financial advisors serve their clients better and promoting financial literacy every month of the year.

To learn more about protecting your clients' livelihood now and into the future, download your free guide on becoming a successful retirement planner.

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