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Jun 30, 2020

This report explores how wealth managers can empower clients as well as their children to become informed participants in the growth and management of their wealth. The research examines the financial education needs of multiple segments, including women, millennials, and HNW clients. However, common to all segments it focuses on digital education tools.

Financial literacy rates are surprisingly low across income levels in the US. For example, the country ranks 14th in terms of financial literacy, with millennials showing particularly low levels of financial acumen. This is hardly surprising given families’ discomfort with discussing financial matters and the exclusion of financial concepts from standard curriculums. However, it means many individuals will be ill-prepared to manage their finances or any inheritance they may receive. This will become increasingly problematic as the intergeneration wealth transfer gains pace.

Research shows that both clients and advisors are concerned about this lack of financial literacy. A survey conducted by HSBC found that that less than half of parents are confident that their children can grow their wealth. Among the adult population, women and millennials frequently report lower levels of financial confidence. Thus, it makes sense that 78% of American financial advisors surveyed by InvestmentNews identified financial literacy as a concern. Without a minimal familiarity with financial basics, advisors need to allocate more time explaining wealth management strategies and under-informed clients may become frustrated by their inability to direct or collaborate in those strategies. For these reasons, digital financial education tools offer benefits to both wealth management firms and their clients.

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