Pandemic & Planning

Financial Literacy 2.0: How to Serve the “Expert” Client

Understanding the need to revisit & review the strategies of HNW planning

by Laura Gregg

Ms. Gregg is director of practice management and advisor research at FlexShares Exchange Traded Funds and Co-Host of The Flexible Advisor podcast.

As U.S. investors face an increasingly uncertain future amid the economic fallout from COVID-19, advisors may be looking for new ways to help clients understand how to manage their finances.

Perhaps now more than ever, a client’s understanding of financial planning will be critical to maintaining one’s financial health through this unprecedented time. When it comes to engaging with clients on financial literacy, advisors should avoid taking a one-size-fits-all approach. For clients who are already highly confident in their financial management skills, advisors may need to go beyond basics to truly add value. Advisors need to identify which clients are already “experts,” and determine how to serve them adequately.

Identifying the “Expert” Client

My company conducted a national survey of more than 460 high-net-worth (HNW) primary breadwinner men and women across the U.S. last year, which revealed that this subset of HNW investors is highly confident in their knowledge of investing and financial planning and may require next-level insights from their advisors.

When survey participants were asked to rank their general investment knowledge on a scale of 1-10, more than half of respondents rated it either a 9 or 10. Moreover, two-thirds of respondents rated themselves between an 8 and 10. The data further revealed that men viewed themselves as experts on investing more so than women did — 44 percent of men rated themselves a perfect 10 vs 15 percent of women.

Similarly, this group of high-net-worth primary breadwinners also ranked themselves highly regarding their ability to perform a range of financial planning tasks, such as managing investments, planning for retirement and creating a budget, with a score of over 7 of 10 on every activity. Men rated themselves an average of 8.6 across the eight tasks, vs 7.8 for women. Finally, when comparing individuals who work with financial advisors versus those who don’t, the former rated their financial planning acumen higher.

Financial Literacy for the Expert Client

As revealed by our survey, cookie-cutter financial literacy concepts likely won’t suffice for this confident and capable group of breadwinners. Advisors need to dig deeper to uncover new ground and maximize their value to these clients. This unprecedented time has unearthed new concepts and opportunities advisors can discuss with them, such as:

This may be a good time to discuss your clients’ taxable portfolios to see if there are any securities worth selling ahead of the next downturn. Clients with stock options may want to consider using cash to exercise those stock options...


Become well-acquainted with this aid package. Proactively begin a conversation with clients about how the package may impact them on a case-by-case basis. Help clients understand what they are – or are not – eligible to receive. While your HNW clients are unlikely to receive recovery rebates, it may be pertinent to their adult children who recently entered the work force. Additional elements to familiarize yourself with and to provide counsel on include the legislation’s impact on taxes, charitable giving, retirement accounts and more. Initiating the conversation is key, as this relief package is unknown territory for most.

Tax-Loss Harvesting

This may be a good time to discuss your clients’ taxable portfolios to see if there are any securities worth selling ahead of the next downturn. Clients with stock options may want to consider using cash to exercise those stock options. Explain to clients how locking in a sale of securities at a loss today might potentially reap future tax benefits, as it may be a way to find the silver lining in a market downturn. Should your client choose this exercise, it will be important for you to stay aware of wash sale rules and tax liabilities. While you can’t predict the future, hopefully there will be market gains later this year to offset some losses.

Retirement Planning
Offer to take another look at your clients’ retirement planning. If you think the market downturn may restrict the timing of their retirement, it’s best to communicate this sooner, to allow them to readjust their mindset. Conversely, there will be good news for some clients who are still on track. It may also be worth presenting clients with the opportunity to convert IRAs from Traditional to Roth versions. Since the cost of doing so is paying taxes now on the current value of the IRA, your clients might be better suited to make this conversion when the market is down. This also presents an opportunity for your clients to realize the benefits of future tax redistributions.

While there is no strict rule book on how to provide expert clients with new financial literacy tools, these ideas may help start the conversation. Instilling this practice even beyond Financial Literacy Month will empower your clients by increasing their investment acumen when they need it most.