What Should Clients Read to Learn About Financial Literacy?

Sarah Hargreaves
Sarah Hargreaves

03.25.20 in Wealth Planning & Investing

Estimated Reading Time: 5 Minutes (906 words)


April is National Financial Literacy Month, a time to focus on establishing and maintaining healthy financial habits. In times of market fluctuation and economic uncertainty, it’s more important than ever for your clients to know how to budget, invest, and plan for the future. Everyone has different goals, but understanding the fundamental concepts at play is a pivotal first step to achieving financial success. 

To help you in your quest to broach the basics of saving and investing with clients, friends, or family, my fellow bookworm colleagues and I are here to share some of our favorite, go-to books on the subject. I hope you’ll find they make good recommendations for anyone looking to improve their financial literacy. Perhaps you’ll even end up with a new addition or two on your bookshelf.

Getting Your Financial Act Together

Broke Millennial by Erin Lowry is a step-by-step guide on how to go from flat broke to financially savvy. As a 26-year-old who loves avocado toast and lives in Boston, I can certainly relate to the title. Of course, I consider my financial health to be in relatively decent shape: I have a stable job, I pay myself first with 401(k) contributions, I stay on top of my recurring monthly expenses, and, above all else, I attempt to spend less than I earn. But the lessons in this book go beyond just saving and investing, and I found very useful tips on everything from negotiating salary to splitting a dinner bill with friends.

Finding Success as an Average Investor

One Up On Wall Street by Peter Lynch aims to help average investors understand the choices that lead to investing success. Becca Hajjar, Commonwealth’s senior vice president, field development and transition, read this book after starting her first job and beginning to invest for herself. She recalls learning to “invest in what you know”—the well-run stores and companies she frequented. But her most important takeaway was to “buy and hold the good companies over the long term.” And that’s a fundamental lesson she still thinks about to this day.

Protecting Your Investments from a Downturn

Crash-Test Investing by Commonwealth CIO Brad McMillan offers novice and experienced investors a jargon-free approach to navigating the market. McMillan edifies key investing and portfolio construction strategies while relating investing to taking a road trip. Although you may experience flat tires, potholes, or other turbulence along the way, “putting seat belts on your investments” allows you to maximize returns and reduce risks. Kate Flood, director and executive editor at Commonwealth (and copy editor of Crash-Test Investing), not only owns this book but gifted both her parents and her brother and sister-in-law a copy to teach them a different way to invest.

Making Better Decisions in the Face of Uncertainty

Thinking in Bets by Annie Duke, a former poker champion, is a great read for anyone looking to understand the relationship between decision-making and investing. With investing, you choose when to buy a position and when to sell it—hopefully with an established process in place. Jack Wolff, a wealth advisor at Lightship Wealth Strategies in Newton Lower Falls, Massachusetts, recommends this book because it defines what makes a great decision—“[it’s] not that it has a great outcome; rather, a great decision is the result of a good process”—and serves as a great road map.

Reaching Financial Independence, No Matter What You Earn

The Millionaire Next Door, by Thomas Stanley and William Danko, debunks stereotypes about the definition of “true wealth.” Kristine McManus, Commonwealth’s chief business development officer, practice management, says this book encourages people to “stop thinking that folks in expensive houses and cars have great wealth; instead, they're probably managing significant debt.” Indeed, the extravagance portrayed in pop culture is a fallacy, and most millionaires, the authors assert, achieved their financial independence by means of diligent planning and modest living practices. It’s a great read to help clients understand that being a millionaire is an attainable goal for just about anyone.

Gaining a New Perspective by Shifting Your Viewpoint

What the Dog Saw: And Other Adventures by Malcolm Gladwell illustrates that being able to see the world through the eyes of others is a necessary skill. These essays, compiled as a “best of” from Gladwell’s career at the New Yorker, gives the reader a lot to ponder on topics that range from hair dye and homelessness to the Challenger and Cesar Millan, the “dog whisperer.” Although it’s not exactly a book on financial literacy, Nick Follett, a research analyst and manager of Commonwealth’s fixed income team, recommends it because it helped him understand the importance of shifting his viewpoint. Sometimes, helping someone understand complicated topics—like intricate bond concepts—simply requires us to look at the situation from another perspective.

Helping Your Clients Help Themselves

In times like these, your top priority as an advisor is to help your clients through the turmoil, encourage them not to overreact, and make sure they maintain perspective. Once you’ve gotten them through this, they’ll very likely want additional help with saving, budgeting, and investing—the fundamentals of financial literacy. They can achieve this through routine assessment, a willingness to learn and implement new habits, and the determination to improve each day. With the right tools and resources in place, we can rewrite the literacy narrative to encompass what we can control: our behaviors. And when the next market downturn occurs, your clients will be better prepared—financially and emotionally—to weather the storm.

This material is for educational purposes only and is not intended to provide specific advice.

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