Why Financial Literacy & Education Are Key for the Next Generation

The Data Possible Podcast: Episode #8

Speaker: Kate Healy

Summary: In this episode of The Data Possible Podcast, Kate Healy, board member of the Foundation for Financial Planning and Invest in Others, reflects on how the financial services industry has evolved over the past few decades, why financial literacy and education is key for grooming the next generation of professionals, and the ways measuring marketing can make a difference to an advisor practice. You will learn:

  • Why financial education is so important for a young professional’s career path
  • How taking advantage of data turns your marketing into a science
  • What data points you should be collecting
  • How financial literacy and financial education help bring in a diverse workforce
  • How advisors can give back

Resources: Discovery Data | Invest in Others | Advisorpedia

Podcast Transcription:

Doug: Hello, and welcome to the Data Possible Podcast presented by Discovery Data. This is your host, Doug Heikkinen. And today, our guest is Kate Healy, the former Managing Director at TD Ameritrade and current chair of the Foundation for Financial Planning. She’s also on the board of the charitable foundation, Invest in Others. Welcome, Kate.

Kate: Thanks so much for having me, Doug. I’m excited to speak today.

Doug: Me too. As I mentioned in your prior job you spent a decade working with and for financial advisors, Malcolm Gladwell would most likely give you your 10,000 hours certificate as a master in this industry. What are some of the big changes you’ve seen over that time?

Kate: Yeah, absolutely. And it’s been more than a decade. It’s been a couple decades. So it’s definitely changed. But one of the things that I see and that I love is we’re on this journey towards really becoming a profession. I spent a ton of time talking to advisors about what that next generation looks like. And we know that we’ve got a talent shortage. Advisors are really getting interested in hiring more talent, and they’re having some trouble finding it. And what I’d like to say is that some of it’s just about developing the talent. We’ll get into it further in the conversation, but really thinking about, how do you develop the people who are already on your team? And then this teams approach, many firms are starting to really look at how they’re coming up with the best client experience. And a lot of times that is making sure you have a team to support the client. So they don’t just have a one-on-one relationship with an advisor. They’ve got a team of advisors that can help them. And that also helps from a development perspective in many ways. And it also helps people as we move towards this demographic shift that we have already moved to and will continue to move towards in this country. Having more diverse people make up a team and having them on the team that’s helping your clients really helps make sure clients feel like their needs are being heard. They’re more likely to find someone that they’re going to feel a comfort level with. And then finally, just this career pathing development is, as we become a profession, really making sure that that next generation knows what they need to do to get to the next level. We can’t expect people to join this profession if they don’t know what they need to do to be successful. So really coming up with and sharing career pathing all the way to take you from graduating with a degree in financial planning, if that’s how you came into the career, up to becoming the lead advisor owner, if that’s something that you want to do.

Doug: Wow, that’s a way different view than I was expecting. And I’m one who thinks that this industry doesn’t move very fast, whether it be compliance, or who’s getting paid, or lack of innovation. Sometimes it can just take a month to get a meeting. It seems like we’re behind. Are you in my boat? Or do you have a different view?

Kate: Well, I do think that we do tend to move slow. And yes, we are a little bit behind. But the world is moving much quicker. And so it’s imperative for us to just begin to move fast. You know, I like to say that, for the last 10 years, I’ve been talking about the demographic shift. And I will tell you, Doug, that for the first 5, 6, 7 years, people would say to me, “You know, whatever, Kate, we hear you but, it doesn’t it doesn’t affect me. Why? Why? Why are you telling me about this?” And the last three years, that conversation has shifted from “Why is it so important?” to “Oh my gosh, how do I do it? What’s the how now? How can I address this looming change in demographics? How do I make sure that my business is prepared to take this on?” So yeah, we are moving slow. But I think we’re realizing that we have got to make our metabolism much faster, because the world is not slowing down.

Doug: So, let’s move to your sweet spot, marketing. And let’s group everyone in here: institution, product providers, and advisors. Why is marketing so important, becoming even more important, and how can it be successful?

Kate: I love that you just lumped everyone together, because that’s what often happens when a client or prospect sees us. They feel like we’re all lumped together. They cannot see the differentiation between different brands, and frankly, what different people do. What does a product provider do that a broker-dealer doesn’t do, or does do, or how is an advisor different? And so, marketing is so important to tell your story. I always like to tell people I started out in economics and accounting, and people say, well, what are you doing in marketing? Well, marketing is a science. Everyone thinks of the creative piece, and that’s a big part of it. But generally you hire creative talent for that. Marketing itself, what we do many times, is that science, looking at the data. Data and analytics are hugely important. And what has happened in the past five to seven years that’s been phenomenal for marketers is there’s so much more information than we ever had before it can be overwhelming. But it can also help us just get so much smarter. It allows us to become more efficient. We’re not throwing money away with messaging, or to audiences that aren’t going to listen and don’t care. And when we think about practice management one-on-one, what do we say: get to know your client and prospect and work with the people that you like. Well, we’re now allowed to do that. We have the tools to analyze who are the clients that we work wit,h that we really like to work with, that are profitable for our company. Now we know what they look like. We can match that dataset to prospects out there, whether it’s through Facebook or a Google search. We have the ability to find people more efficiently that will match the people that we want to work with, and so when you think of efficiency in a practice, marketing is one way to really help you define your target audience. When you’re looking at all this data, you’re going to be able to figure out who are the ones that I want to work with and how do I find more of them. Who is engaging with me in my marketing, whether it’s through social media or it’s email marketing, because that still works. All of those different things you’re able to find who’s engaging with you. The evolution of branding, and this is where it becomes especially important for advisors, is digital marketing, social media marketing. Those are ways that you can actually become personal, and today’s branding is personal. You look at social media. It’s about influencers. Who do the big brands look to? They look to influencers on social media to connect with their prospects and clients. And for advisors who are facing that uphill battle, maybe competing against national brands, this is one of the best ways that they can get through creating that personal marketing that really lets a prospect get to know who they are.

Doug: I’m so glad you mentioned data. Being that this is The Data Possible Podcast, are there specific data points or things that marketers should look at in terms of data that should be most important to them?

Kate: Data is everything and there is so much data that we try to get advisors to also focus. Because you can know everything about everything, and then it can be paralyzing. So really looking at the important things, that can be, depending on how you’re running your business, demographics, whether it’s gender, whether it’s geography, whether it’s socio-economic, or what people are doing for a living. There’s different data points that are going to help you really hone in on who you’re going to work with. And then really when you look at your marketing efforts, look at the efficacy of what you’re doing. Are your emails getting opened? What’s happening after they open them? So click through rates, open rates. You can test your taglines, your headlines, the email headline that you’re leading with, the subject line. Is it getting open. It’s a great way to really become more efficient at your marketing. And then look at the engagement. How much time are people spending on your website? But probably the most important is how are they then working with you. Are they taking that marketing that was an email or social media, twitter posts that got them to your website. How are you converting them to a lead? Are you collecting that information, are you then following up with it, is it being sent to your sales team so that they can follow up? If you’ve got that to make sure that you are being fresh with your audience. I’m laughing, just today I reached out to a firm that I wanted to do some business with and they have a chat function so I started chatting with them. And they answered me once and then they never answered me again. Well now I’m not going to do business with them because they put that out there for me to use and yet they weren’t actually using it. And now I’m going to have to go call someone on the phone, which wasn’t my ideal way to work with them. And I had a need that could have been filled today and now I’m going to move on to someone else because they weren’t responsive to the marketing that they’ve that they put out there. So if you’re not going to be concentrating on social media marketing or on email marketing or on your website, then number one, you’re not going to be successful in today’s world, but also then don’t put it out there because you’re just going to create a negative client experience.

Doug: That’s great insight. Kate, as you grew in the industry you earned your way to a very high level at TD. What’s your perception of the number of women in the industry and do people have an accurate view of it?

Kate: This is where data is so important. I tell people, when I started out in this industry, I didn’t see a shortage of females at all. I turned around and it seemed half and half. But as I grew in my career, and I moved into different roles, that’s when I turned around, I looked, and I realized that there were many fewer women and that we weren’t doing a good job of retaining them. People were leaving, for whatever reason, starting a family, moving, whatever. But they weren’t making their way back into this industry, because we weren’t making it easy for them. So I think that we do have a shortage of women. But the way I like to flip that a little bit is to play with the data a little bit. That’s the great part about data. You can use it to tell the story that you want. So the greatest part is that you can tell a story with data. Now, we have all heard the stories about the number of women financial advisors in this industry certainly tells us somewhere between 15 and 16%, depending on the business line, the CFP board tells us that 23% of women. And that’s true. But in actuality, 46% of the profession is made up of women, they’re just not advisors. So we don’t talk about them as much. But they’re client service associates, the marketing team, the legal team, the Operations Manager. And so when we think about the shortage of women that we have in this profession, and the lack of development that we sometimes do, I think that we can bring more women into the advisory side of the business just by looking within our own firms. And talking to people and creating those career paths and creating development opportunities for people that want to maybe go there. When someone starts out in this career, it’s very overwhelming. Depending on the business model, you go into the way we introduce this to the next generation, it’s kind of the same way we did it before. And it’s all about sales and cold calling and referrals. But as firms are growing today, if they can hire beyond that, they can create a career path. So bringing an intern in college, get them exposure to clients, then they can join the firm as an advisor or maybe as a client service associate and build on their knowledge to become an associate planner, which can lead to them becoming a lead advisor or an owner. But we have to think about the fact that not everyone needs to be an advisor in this industry. As we professionalize our firms and they grow larger, we have this real need for professional talent, whether that’s running HR, whether that’s running marketing, or the trading desk, or the legal department. So we have this opportunity to continue to bring more women into this profession. But also turn around and look at the folks that are already in our firm and look at ways that we can better develop that talent. It takes some work, but the payoff is really worth it. Because everyone that I talked to is looking for their next perfect hire. And that’s always someone who has three to five years’ experience. And there’s a shortage of that talent. But you’re going to spend three to five years looking for it. I have an advisor who came up to me last year and said, “Kate, you’ve been telling me for five years to hire someone out of college. And I didn’t do it. And now it’s five years later. And now I’m going to hire someone out of college. And if I just done that five years ago, I would have that someone that advisor who has five years’ experience, which is exactly what I’ve been looking for. But I’ve got to start from scratch now.” So I think it’s just so important to think about the development of this talent. Because women are here, we just need to give them that voice. Give them that seat at the table and showcase them so that more women become attracted to joining this fantastic profession.

Doug: I’m going to throw something else out there that I’d like your opinion on. Could efforts in financial literacy and financial education both be bridges to building a pipeline for talent? And if you agree with me, how do those efforts help bring in a diverse workforce?

Kate: Yeah, I do agree with you. Absolutely. Right, because one of the reasons people don’t come into the profession is because they don’t know about it. Only 25% of this country actually works with a financial advisor. So if you didn’t grow up in a family that did, how do you even know this exists? You don’t know that you can go to a financial planner for help. We don’t teach financial literacy in 30 states in this country, so there’s no exposure to it. So absolutely. The efforts around educating people on getting smarter about their finances then also leads to the discussion, by the way, there are people that can help you with your finances, and introducing that to a broader base of people is going to engage more people with this profession. And so I talk to people often about financial education efforts as a pipeline for more diverse talent. The more you are doing to educate everyone about this, we’re going to expand that pipeline of talent, we’re going to get those more diverse voices, we’re going to bring this to a more diverse audience, and that is going to help bring up that workforce because we’re going to create that interest. If you talk to a lot of students who are in financial planning programs, they didn’t choose this until their sophomore or junior year and the way they did it was because they found an a professor who taught it, who spent some time with them show them an interest in it, or they got a financial literacy class given to them at college that was provided by the financial planning program themselves. But it really is a way to for us to expand this. There is such a lack of knowledge that this profession exists, that it’s so important for us to do everything that we can to create that awareness and to make sure that we’re getting out there into all of the school systems, everywhere you can get to talk to whether it’s the boys clubs or the girls clubs, that’s going to create the interest and that pipeline for more diverse talent to join this industry.

Doug: I’ve been on a couple of clubhouse calls talking with investors about the value of having a financial advisor and the lack of knowledge around finance in general and the benefits of even talking to a financial advisor is alarming. So how do we as an industry do a better job?

Kate: It’s all about us telling our stories. This podcast is a great way. I tell all advisors, you should go to every career day you can, talk about what it is you do, talk to your clients’ kids. They’re the ones who get the value of what it is that they do. And then we always tell all the students that we used to bring in and award scholarships for financial planning programs, tell your friends, it’s so important for us to create the awareness. Just this week the CFP board is launching a campaign to create more awareness about CFPs. Those are the kinds of programs that are great. They cost a lot of money, there’s a lot that we can do as advisors to just tell the story. I mentioned career days. Get on college campuses, get into financial planning programs. And if there’s not a local financial planning program, then go to the economics department, also go to the social sciences. People who become great financial planners are the helpers. They want to do something, they want to help people, and many people are going to school for social work or teaching or psychology. They want to help people but they don’t know that this career exists. And once they find out about it, realize they can make a good living, it becomes a much better story it becomes a better way to bring them into this industry.

Doug: So how can advisors themselves give back within the industry? Have you seen some great things happening?

Kate: Yeah, you know, mentoring is number one but none of us got to where we are today without someone helping guide us. So mentoring is a big piece. And I think people get overwhelmed by mentoring because I think it’s always going to be part of a big program. I like to use what I call situational mentoring. I might mentor people for a month just to maybe talk them through a situation, what’s the right way to pick a college degree, to get into college, or how do I get myself set up in my first job. So it can be quick interactions that you have. But it’s so important for advisors to get involved, to get onto the college campuses. You can mentor, you can teach a class. Every financial planning professor would love it if you came and brought your expertise to be a guest lecturer in a class. Bring lunch when everyone’s back in school. Bring them lunch and also think about giving back from, say, a scholarship perspective. You know, a $5,000 scholarship to a financial planning student can make such a difference in their lives. Many of the financial planning programs, especially the ones that are really recruiting more diverse talent, have a very large percentage of first generation college students. And they’re struggling, they’re working, they’re trying to finance their college education themselves, go to school, and all that. And a $5,000 contribution from an advisor can really help ease that. And then the other way is to give back through pro bono financial planning. A recent CFP survey showed 70% of CFPs provide pro bono services today. I think it’s a fantastic way for us to really, as I talked about before, continue on that evolution to profession. A profession gives back to everyone. And through the foundation for financial planning, there are opportunities for advisors to find pro bono financial planning engagements. They can be a one-time engagement, you can engage with someone long term, you can help people who are affected by cancer, you can help people who are in the military, victims of domestic violence, older people who are subject to lots of misinformation. There are many ways that people can give back. But it is so important to showcase how great this profession is.

Doug: I like all those, especially mentoring. I had a mentor at my time at Schwab for 13 years. And let me tell you that mentoring is not always a pat on the back. It can be difficult messages sent.

Kate: I think it’s best when it’s not a pat on the back, right. It’s someone who really tells you as it is and makes you grow.

Doug: As I mentioned at the top, you’re on the board of Invest in Others. Talk a little bit about that and why it’s such an important foundation.

Kate: Yeah, you know, I’ve been on the board for about five years now. And it is such an important organization. It’s the only organization that’s dedicated to amplifying the charitable work of financial advisors, and 2021 is a milestone for us. It’s our 15th anniversary. We started as a conference theme for LPL in 2006. And it’s really grown now into what many people know as this great awards program that provides money to nonprofits. But over the past several years, we’ve grown even past that. We’ve come up with multiple programs. We’ve got events. We’re really making a bigger financial impact on nonprofits in our communities. And so when we started 15 years ago, we had our flagship Invest in Others awards. And that first year we awarded $65,000 to 14 charities. Well, fast forward 15 years and this year, we’re shooting to award almost a million dollars to 100 organizations in need. And if you’ve never been a part of Invest in Others, and you haven’t gone to one of the galas, I tell you, go. It is one of the most life changing events. You know, some of the speakers, some of the winners that we’ve had in the past, like Mary Lou Adler. She lost her son to suicide. But she decided to brighten that situation by dedicating her time to create a local branch of the American Foundation for Suicide Prevention in Utah. And as a result, she saved numerous lives. And today, they’re one of the most successful chapters in the country. Richard Brown met the co-founder of the Starkey Hearing Foundation at an event, and he asked us to meet up with them to learn a little bit more about the organization. Well, long story short, Richard went home that night and packed his bags. And he left on a two week international trip to really get immersed in their work and get a better understanding of the mission of the nonprofit. And today, he’s the president and chairman of the board. And then Lillian Gray used her own experience as the daughter of immigrants to become involved with an organization that helps close the gap for Latino students so they can graduate from college. There are so many more stories like this. I come away from that event every year in tears, and thinking, wow, I don’t do enough. There are so many fantastic advisors that do great things, and they can win money for their charities. So it’s really important for advisors to get involved with Invest in Others. And what one of the great changes that we’ve made that I really like is that we give away grants during the year. We’ve got several different grant programs. And for the first time now it’s not just for advisors, it’s for anyone who’s in the industry. So it’s really important for all of us in the industry, even if you’re not a financial advisor, to look to Invest in Others to look at ways that you can help get money for your own nonprofits that you support.

Doug: What can people do to contribute to Invest in Others?

Kate: I’m so glad you asked that. The best ways really to spread the word about Invest in Others and all of its programs. So get on social media, follow us, like us, share the content on Twitter, on LinkedIn, on Facebook, nominate an advisor for the Invest in Others awards. Once a year there’s a nomination period open for the larger awards that get awarded in the fall, and then apply for grants. And they just talked about on behalf of a nonprofit. And again, that’s open to anyone working in the industry. And then donate, whether it’s a personal gift, or if you help with a corporate sponsorship. The funding is critical to our efforts to make a meaningful impact in our communities. So lots of ways to get involved with Invest in Others.

Doug: That’s great. Kate, you are awesome. Thank you so much for joining us.