Advisors help educate older Americans

Poor financial literacy continues to hamper many Americans’ quest for prosperity and security. While more schools now offer personal finance courses for younger people, the task of educating adults about managing their finances during their working and retirement years often falls to financial advisors.

“Lacking financial literacy and not knowing how to manage one’s personal finances carried a high cost in 2020,” the National Financial Educators Council stated. The Council’s survey of more than 1,500 Americans in late 2020 and early 2021 found people lost an average of $1,643 because of insufficient financial knowledge. Those losses are much higher than the NFEC’s previous survey when financial illiteracy cost people $1,279 in 2019.

More U.S. high schools have added financial and economic programs in recent years, according to the Council for Economic Education. While the CEE’s biannual survey of schools for 2020 found that 70% of high school students now have the option of taking a personal finance class, only 17% of those students were required to take the courses.

At Legacy Wealth Management Inc., “Education is crucial part of what we do,” according to Jay Sharifi, president of the firm in Manassas, Virginia. Sharifi is also the author of Building a Better Legacy: Retirement Planning for Your Lifetime and Beyond.

Sharifi said his firm takes a holistic approach to financial planning. Legacy Wealth Management follows a three-meeting process for new clients, with the first two meetings focusing on education.

“Those meetings are all about understanding the clients and explaining who we are,” he said. “It’s talking about your fears, your history, and your past experiences. We want to make sure we cover all the different areas that emotionally drive a client to make decisions. Once we figure that out, then we can assist them, guide them, and protect them from what they don’t know is hurting them when they make decisions.”

Often client education arises from having honest and candid conversations that can sometimes be extremely uncomfortable, Sharifi said. The goal with those frank meetings is to ensure we value each other’s views and understands that he or she is looking out for the client’s best interests. Those conversations may cover such topics as longevity, inflation, taxes, and long-term care.

“We help them understand that longevity can actually have two aspects,” he added. “I believe that it is actually everyone’s biggest obstacle, but through financial planning, it can also become your greatest opportunity.”

One important factor when evaluating new clients in ensuring they will be open to learning and listening. Sharifi said he first tries to earn their respect and trust. Once he knows that clients will accept his guidance and suggestions, he can agree to work with them.

“It’s important to make the client take responsibility if they request something unhealthy for themselves,” he said, “I also want to make sure they will take responsibility for that. Sometimes clients do not really want to work with an advisor, but rather just have the advisor be responsible for certain actions. That’s where we really draw the line: we need to work together.”

The initial meetings also address terminology. The aim is to make sure that both sides understand each other clearly and are using the same vocabulary.

“What does risk mean to the client? What does volatility mean? Some clients get very scared when we use certain terms. We want to be careful that the fear of those words is not holding them back from understanding what we say,” said Sharifi.

In every conversation with clients or colleagues, Sharifi strives to make sure he is providing value to – and connecting with – the other party. He tries to be as clear and truthful as possible. Then he takes as much responsibility as he can for each conversation and each decision.

“My intention is to make that personal connection,” he said. “I need to let them know exactly what I want because, if I can’t be clear, I can’t hold them responsible either. The saying goes, ‘Only say what you can do and do exactly what you say.’ We hold ourselves to that standard by being as clear, honest, and truthful as we can with each conversation. I believe that carries a lot of weight over time.”

Building strong client connections also helps generate referrals, which make up a significant portion of Legacy Wealth Management’s business. If the firm receives a referral from a client, the firm may make exceptions to the normal firm minimum of at least $250,000 in assets.

“Referrals indicate that we’ve exceeded our clients’ expectations, and that the clients feel comfortable enough to put their names on the line for us,” he said. “We value that. We don’t want to lose that respect, trust, and love that they have for what we’ve done thus far.”

One way to build those connections beyond face-to-face, individual conversations is through client events designed to bring the community together. Sharifi said hundreds of people attend the firm’s events. They meet other clients and share their experiences, reaffirming their progress with their peers.

“What they find is something that helps them continue putting their names on the line and giving us referrals. That communication and connection has been tremendously important and valuable, not only for us but also for our clients. It allows the clients to sleep with ease and comfort, rather than being worried and concerned about the current state of affairs, about what’s going to happen, or whether they are going to make ends meet down the road,” he said.

Sharifi said the combination of industry experience and building personal connections gives financial advisors a considerable advantage over newly emerging competition from trading platforms, robo-advisors, and other automated tools.

“What those platforms can never do is make a human connection with a human being,” he said. “As we move forward and volatility increases in the market, the most valuable aspect is going to be connection. I don’t see computers being able to do that. I’m sure there are some people in our society who will count on those tools, and it will work for them. But most people prefer sitting down with someone across the table and making sure that they have someone they can trust to take care of these financial decisions for them. That’s exactly what we do here.”

Sharifi said his firm helps clients by being truthful and sharing opinions on whether their current financial plans have a high probability of success. Unlike a computer program, he said, someone with real-world experience can provide insightful perceptions about the quality of a plan.

“Hopefully that experience carries some weight with the clients and helps build trust that our connection is going to protect them,” he continued. “We believe they’re going to value that opinion much more than a computer program that might have an incorrect inflation rate, or the wrong rate of return applied to their funds over the next 40 years. The tool may show them a plan that seems it would be successful, but in reality, it has no chance of succeeding. That’s the value you get from a quality advisor with experience.”

He added, “I haven’t gotten to where I am over the last 18 years because I’ve worked only in good times. Although a good portion of my advisory role has been during good times, I am where I am today because I learned how to guide my clients during bad times. That’s when I really had the biggest impact – not only in my firm, but as an advisor helping my clients. Bad times are when I am needed most.”

That experience is particularly relevant to retirement planning, where it is important to anticipate the ups and downs of future economic cycles. Retirement plans must be reviewed regularly to adjust to changes in personal situations, the markets, and regulatory and tax environments.

Sharifi said clients need to understand that the way their financial plans were done in the past may need adjustments to meet their future goals. For retirees in their 70s and 80s, he noted, the world is much different today than it was when they were thinking about retirement in their 50s and 60s.

“Success also depends on the quality of your model,” he added. “There are hundreds of different models out there, but they are not all of equal value. One is not going to work as well as another model in a given situation.”

Sharifi said Legacy Wealth Management does not necessarily aim for the highest returns. For some clients, their goal may be to reach certain alpha that exceeds the market benchmark. But other clients have other priorities.

“We try to figure out exactly what would be most valuable for them and then aim for that highest value,” he explained. “Our model is to figure out what the client needs. Once we both understand what is most valuable for them, then we slowly and precisely start to move in that direction to capture future value. Of course, many clients will need small adjustments to whatever model we have, and that’s exactly what our job is: to provide the guidance and leadership needed to capture the required value. As an advisor, my job is to make small adjustments as we move forward that are personalized to each client.”

The coronavirus pandemic further emphasized the importance of the value financial advisors bring to the table, Sharifi said. The financial and health crisis brought home how much clients need advisors during unpredictable times. It also stressed the importance of advisors being available to pick up the phone when clients call, rather than sending those calls to voicemail.

“It’s the little things that matter,” he continued. “It’s how important communication is throughout the year, and how important regular portfolio reviews are to ensure we stay the course. All of those things make a huge difference. Particularly during tough times, that’s when you want to be available all the time.”

With each passing year, Sharifi said, he realizes he has not simply made a difference in other people’s lives; they have also made tremendous impacts on him.

“It’s a two-way street,” he said. “It’s incredibly fulfilling, knowing that I’ve helped guide people who perhaps were not going to make forward progress in their financial security. They ended up doing so because they knew they had someone they trusted who could guide them in areas where they weren’t very comfortable. Seeing them live a more comfortable life is certainly humbling and fulfilling.”

Looking ahead to the immediate future, Sharifi said he intends to spend less time on the details of running his business so he can increase the focus on his clients.

“My personal goal is to spend more time specifically with clients because that’s what I love. That’s where the most value is for me and for my clients: being able to help more people in our community.”

For more information on Legacy Wealth Management, visit lwealthmanagement.com.