What I Learned During Financial Literacy Month Amid a Pandemic
Remembering the importance of fundamentals during the COVID-19 outbreak
April was Financial Literacy Month, which I always look forward to as an opportunity to assess how I am helping financial advisors, clients, and members of my community think through their financial wellbeing. This year, however, due to our extraordinary circumstances, the need for this awareness has never been clearer. While I look forward to educating others during this month, this year I found myself reminded of many fundamentals it can be easy for financial advisors to lose sight of under normal circumstances.
The spread of the COVID-19 pandemic has caused unprecedented volatility in the market and left many people feeling afraid and unmoored financially. Record-high unemployment and a patchwork of local, federal and industry-specific responses has added to this confusion and uncertainty. However, rather than getting caught up in the daily storm of market movements, I think it’s important to keep in mind that in order to create the recovery this crisis demands, we must ensure that each and every person is empowered to make the best decisions and to take advantage of emergency measures as they are put into place.
This is a vital role for financial advisors to play as we begin to think about our collective financial wellbeing going forward. The decisions clients make during a financial crisis can have an impact for many years following the event. I have seen this firsthand before: in the Global Financial Crisis, many people became so frightened by the stock market crash that they sold their stocks, locking in their losses and missing out on the stock market recovery. Those with a financial advisor have historically been less likely to do that because they have a long-term investment plan. And the need for financial literacy and guidance is especially important for women and other groups who have been historically disenfranchised. They may not have an existing network of knowledgeable advisors, a strong understanding of financial best practices, or knowledge of how to gain access to these resources.
Throughout the previous month, I was conscious of the steps we can take as financial services professionals to make sure that our message extends to the largest possible audience. For starters, we can share our voices through social networks such as this one, extending the reach of our message far beyond what was possible in the past. And we can focus on expanding beyond our usual networks to reach new audiences, through these and other means.
Participating in community discussions or answering questions from those we don’t know has, in some ways, never been easier now that public meetings are online, and people are gathering through Zoom and other applications, removing the need for travel. While we are all extremely busy during this crisis, taking even a few moments to engage with someone outside of your immediate network can provide a valuable first step in explaining what we do to those unfamiliar with our industry.
It’s also important for financial advisors to remember that even your most financially savvy clients may be questioning their knowledge under these circumstances and second-guessing what their next steps should be. These might not be the clients who first come to mind when you think about Financial Literacy Month, but what I learned throughout April was that in today’s environment, taking a step back and reinforcing financial best practices is helpful for everyone.
That’s my biggest takeaway from Financial Literacy Month in the time of COVID-19: that this is an opportunity for all of us to think through what our clients need from us and what financial wellbeing looks like at the end of a difficult road. We can build a stronger financial recovery and a more resilient future for everyone if we give people the tools they need now to succeed. One of the most important tools will be a clear understanding of how the financial system works, and the importance of creating a durable financial plan.
While it may seem like there are more pressing concerns during a crisis such as this one, its actually more important than ever that we all understand the benefits available to us, have a long-term view of our financial futures, and avoid making decisions based on panic or fear. This month is the perfect opportunity to make that happen, and I’m confident that if we take this opportunity, investors will emerge from this crisis with greater confidence that they can achieve their long-term goals, and the knowledge that they have a plan that can help them weather future storms.
Initiatives such as Financial Literacy Month are an important reminder that advisors will play a key role in helping society recover from the pandemic. We need to carry this message through every month of the year and remember its importance long after the current crisis has passed.
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The opinions referenced above are those of the author as of May 14, 2020. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.