By Sheila McClune
How much do you think your clients know about financial planning? How much do they think they know?
Gauging your clients' level of knowledge is an important part of correctly targeting various communications-from newsletters to blogs-for maximum impact. How do differences in perceptions of what clients think they know, versus what planners think their clients know, affect communication?
The FPA Research Center recently partnered with USA TODAY to survey financial planners and consumers.1 As part of that survey, FPA asked financial planners to indicate the degree of knowledge their typical client has in each of the following areas: basic budgeting, financial goal-setting, insurance issues, investment issues and strategies, tax planning, retirement planning and estate planning. USA TODAY then asked a panel of their readers who regularly use financial planning services to rate their knowledge in the same seven areas.
The percentage of financial planning customers who rated themselves as "very knowledgeable" or "somewhat knowledgeable" was higher than the percentage of financial planners who gave their typical client the same ratings in all seven areas.
Even when planners and consumers seem to agree on the consumers' basic level of knowledge, there are still some differences in degree. The biggest discrepancies can be seen in the areas of insurance and estate planning issues. More than three-quarters of consumers rate themselves as being at least somewhat knowledgeable of insurance issues, while the majority (63 percent) of planners felt their typical client is not very knowledgeable or not knowledgeable at all in insurance. Likewise, nearly two-thirds of consumers felt they were knowledgeable in estate planning, while only 30 percent of planners agreed.
What do these differences in perception mean to financial planning practitioners? While there isn't an easy way to measure how much consumers actually know compared to how much they believe they know, financial planners may want to investigate ways to estimate their clients' knowledge as part of the data-gathering process.
At the very least, advisers should be aware that their clients are likely to feel that they are at least somewhat knowledgeable about the topics being discussed. They should also keep in mind that some topics, such as insurance issues and estate planning, need to be approached with sensitivity to the fact that clients may feel that they are better-informed than they actually are.
Keeping these client perceptions in mind will improve communications and allow financial planners to deliver their services more effectively.
Sheila McClune is a data analyst for the Financial Planning Association. Contact her at Sheila.McClune@FPAnet.org.
Key Findings of the FPA/USA TODAY Survey
- In general, financial planners see their clients as being less knowledgeable than most financial planning consumers see themselves.
- Consumers of financial planning services feel they are at least somewhat knowledgeable about seven key financial planning topics.
- Consumers are least confident about their knowledge in the areas of tax planning and estate planning.
1. Three hundred seventy-five FPA Research Group participants from a representative sample of the FPA membership completed the survey in March 2009, giving a 5 percent margin of error. USA TODAY asked their panel of readers to provide similar feedback on communication preferences and general financial planning in June 2009. A total of 1,459 consumers responded to the survey with 137 incompletes. Of those responding, 414 regularly work with a financial planner, and 908 do not.