As financial advisors, attorneys, CPAs and estate planning practitioners, we know that the keys to a successful financial future are setting goals and planning. In fact, our businesses depend on guiding individuals and families to help them create their financial and estate plans. It’s alarming, then to realize that most families don’t have a financial or estate plan, and many falsely believe that only wealthy families need financial and estate plans. Even worse, many are uninformed and ill prepared to manage their own finances.
Now more than ever, individuals should become familiar with the financial tools they need to create and follow a budget, manage debt and save for retirement. They need the assistance of legal and financial professionals to help them create an effective financial plan that will help them set goals, invest with those goals in mind and reap the rewards of diligent planning. Moreover, an estate plan can help families manage their assets, maximize tax savings and minimize the headaches that accompany probate following the death of a loved one.
Financial Education
In a recent study, 41 percent of adults stated that they learned about personal finance from home, but 34 percent of respondents (77 million people) gave themselves a C, D or F on personal finance skills, leading to the assumption that those who make the financial decisions at home are in need of financial education. In fact, 56 percent of the respondents admitted that they don’t have a budget, and 78 percent said they would benefit from the advice of a financial professional.1
Further, managing debt is still a major issue for many families. While overall bankruptcy filings were down 8 percent in 2011 to over 1.4 million filings, many practitioners believe this may be the calm before the storm, since many homeowners were hoping to take advantage of foreclosure and mortgage relief that may never materialize. The average credit card debt in 2010 reached $15,956 per household, with total U.S. consumer debt reaching $2.5 trillion in 2011.2
Retirement Advice
People are also in dire need of advice when it comes to retirement. A recent Fidelity study stated that the average 401(k) balance was $70,000 and, for an individual to have adequate retirement savings, he would have to save 14.6 times his average annual salary.3 Unfortunately, many baby boomers haven’t saved enough and rely heavily on monthly Social Security benefits for retirement income.
National Financial Literacy Month
Fortunately, the need for financial and estate planning was made public on a national level, when President Obama proclaimed April as National Financial Literacy Month and signed a Presidential Proclamation on March 31, 2011. The Proclamation further states, “To lay the foundation for continued prosperity, we must expand the availability of financial products and services that are fair, affordable, understandable, and reliable. We must also strive to ensure all Americans have the skills to manage their fiscal resources effectively … ”
In response to this proclamation, the National Association of Estate Planners & Councils (NAEPC) and the NAEPC Education Foundation, together with other leading financial service organizations, aim to mobilize the financial and estate planning communities by providing the support, education and tools to play a fundamental part in National Financial Literacy Month each year. Through their vast network of credentialed financial service providers, they can provide focused financial and estate planning content, tools, seminars and webinars, as well as posts and articles for newsletters, blogs, publications, social media groups and websites during National Financial Literacy Month.
Together these organizations represent over 800,000 professionals in our industry. Accountants, attorneys, financial planners and advisors, insurance agents and brokers and trust officers—all are invited to take part in Financial Literacy Month this April (and also in Estate Planning Awareness Week in October) and to take advantage of the resources available on www.EstatePlanningAnswers.org, such as articles, case studies and presentations. You can also download a National Financial Literacy Month Media Kit at www.naepc.org/estate_planning_week.web.
Here are some ways to celebrate Financial Literacy Month:
1. Develop workshops for clients to learn basic financial literacy skills.
2. Contact your local newspaper with a financial and estate planning article or team together with your office and colleagues to produce and sponsor a financial and estate-planning insert for the month of April.
3. Post new articles on your website and blogs on financial and estate planning topics, noting your support and participation in National Financial Literacy Month.
4. Invite clients, prospects and the general public to “lunch and learns” that may feature a common topic such as budgeting, debt management, credit card tips, investing, estate and retirement planning basics.
5. Partner with community organizations that provide financial counseling as well as with your local affiliated estate planning councils (http://www.naepc.org/search_councils.web).
6. Partner with schools, churches, nonprofits and other organizations to help develop or further existing financial literacy programs for young adults and low-income families.
7. Invite clients to one-on-one consultations to encourage the use of financial and estate plans.
8. Invite clients to review existing financial and estate plans.
9. Develop your own content or feel free to use the content provided on www.EstatePlanningAnswers.org to educate clients.
Individuals and families benefit from receiving the necessary financial literacy education. Financial and estate planning professionals also benefit from taking a proactive approach to financial and estate planning. It’s a win-win situation.
Endnotes
1. National Foundation for Credit Counseling Survey 2010, www.nfcc.org.
2. Federal Reserve’s G.19 report on consumer credit (released February 2012), www.federalreserve.gov.
3. www.fidelity.com/inside-fidelity/employer-services/fidelity-releases-quarterly-snapshot-on-401ks