How To Bridge The Financial Product Knowledge Gap, Drive Business

Recent findings from Barnum Financial Group, as reported by Investment News, show a critical insight for financial advisors: 60% of adults would buy more financial products if only they understood them better, with this figure rising to 72% among young millennials.

The survey reveals several knowledge gaps that financial advisors can address to better serve clients and drive business.

First, there’s a substantial knowledge gap regarding ETFs, derivatives and alternative investments across all generations.

Even as ETFs gain market prominence, no generation reports feeling “very experienced” with these products. In addition, more than half of young millennials consider themselves knowledgeable about cryptocurrencies, but those numbers drop for other kinds of investments (and other age groups). This presents opportunities for advisors to drive business through more effective educational strategies and communication methods.

The survey also highlights a concerning gender disparity in financial preparedness, with 88% of men reported feeling financially prepared compared to 66% of women. Advisors should evaluate their approach to ensure they’re effectively reaching and serving female clients, who may benefit from different communication styles or educational resources.

See Also: Americans Worried They’ll Mess Up Retirement Income Planning, Almost Half Fear Living Too Frugally

Income levels significantly impact product utilization, with higher-income clients ($200,000+) showing markedly greater engagement across investment products compared to those earning under $149,000. However, even among affluent clients, 42% cite confusion about fees and costs as a barrier to purchasing financial products. This indicates a need for greater transparency and clearer communication about pricing structures.

The research also reveals that retirement planning remains the primary financial goal, with 80% of affluent adults seeking peace of mind through financial planning. Debt management emerges as a crucial concern, with many defining financial freedom in retirement as being debt-free. Advisors should consider incorporating more comprehensive debt management strategies into their retirement planning services.

To address these challenges, advisors need to focus on creating individualized plans that remove emotional reactions from the retirement planning process, while developing more effective educational resources that demystify complex financial products and fee structures.

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