“Education can be a key component of your value proposition. Investors are interested in working with a financial advisor who is a comfortable and reliable sounding board for their financial life—someone they can have a conversation with to help inform them of their options and align their investment decision-making with their goals,” she adds.
Investors who scored above 70 percent on the financial literacy test have average investments of 46 percent in equities, while those who scored less than 70 percent only had 28 percent of their funds invested in equities.
At the same time, those scoring higher had less money held in cash than those with poorer scores.
“Knowledge leads to empowerment and better planning,” says Williams. “Those with financial literacy also stick to their plans over the long term and their engagements with their advisors are stronger.”