Financial adviser Terry Kingsbery will stand in front of a room of highly educated people with a dollar bill held up high to make a point about planning for retirement.

Now, a dollar is not worth that much to many investors, and its value is even less these days. But that bill has a huge impact, especially when Kingsbery rips one-third of it away.

"If you don't combat inflation, here is what I give back to you," he tells his audience, waving the two-thirds portion. "Now you're retired - go and buy the same stuff."

They can't, of course, and Kingsbery, who places a premium on educating his clients, has made his point.

 

The Natural

The son of a financial adviser, Kingsbery earned his security license in 1971, when all that was required was a short multiple-choice test. "If you could spell 'options,' that was enough," he says.

Starting in Lubbock, Texas, Kingsbery wound up in Norman, Okla. in 1994 - a time when big banks were adding brokerage services because they feared their customers would walk across the street and open a CD with a competitor. He became a fee-based financial adviser at his own company in 1999 and started his own registered investment advisery firm, Investment Counseling Services Inc., in 2010 with a partner, Daniel Mitchell.

 

It's all about education

Kingsbery believes in making his clients financially literate. Instead of checking a box when a new employee enrolls in a plan, he educates them, too, as financial plans are always evolving. "Things change all the time," he says. "There is no such thing as a financial plan that you put on your shelf and nothing changes."

"This is where our industry fails," he adds. "A lot of times, financial planners are excited when they get a client; they do a good job up front . . . and then if we don't follow up and continue to rebalance and continue to educate, [participants] become too dependent on the plans. You really need to teach them . . . I don't think most of us do that."

And teach he does. For example, he knows clients never want to read a prospectus. Rather, they want to understand asset allocation, small capitalization, etc. The thought of educating them excites him.

He believes it also helps employers, who he says are making a big mistake in holding back on educating employees due to the "cover your a*s rules set out by the Department of Labor." The more educated the employee is, he says, the less the odds are that the employer will be sued for breaching financial liability, and "that just make sense."

It's worth the employer paying an adviser to come in and educate their employees, he says. "The more you can show you've educated them, the less the odds are that something will happen to the employer."

 

Following suit

Educating clients simply builds a tighter bond with them, Kingsbery says. "Our industry thinks the less I educate, the more [money I make] - that's intimidation. We are not going to call the shots right all the time, but if [plan participants] know what you are trying to accomplish, then if there is a misstep, they are a lot more apt to say, 'Fine, I understand.'" So if two steps are missed, maybe eight were correct.

"I think we fear bonding," he continues. "The industry says if I keep them where they don't know what's going on," the more I make, he says. But, in reality, the more advisers explain, the more clients appreciate them, use their services and refer them, he says.

 

Client reaction

Kingsbery's clients, most of whom are employees of The University of Oklahoma, appreciate the time he spends with them and the importance he places on involving and informing them.

"I've worked with financial advisers in the past and because I didn't understand what they were saying, I couldn't evaluate when something was a good fit for me," says Vicki Coury, associate professor and chair of the Department of Dental Hygiene. "I don't have time to sit and learn everything I need to do - but I need to understand it."

Before signing up with Kingsbery, past advisers would send her papers and have her sign them, not explaining what it was. She didn't understand some of the vocabulary in it and lacked the time to figure out what it meant.

But Kingsbery "spent a lot of time with me orientating me to his philosophy [and] trying to understand what my needs are. I interviewed several people and thought he was the best fit," she says. "He understands my goals."

It's really important to have somebody who can explain concepts so you understand them, Coury says. "I can look things up on the Internet, but that doesn't mean I'll all understand what beta means."

University of Oklahoma Director of Bands Bill Wakefield notes that because Kingsbery is an expert in his field, he can save Wakefield time while educating him. Also, being in a university environment, it is nice to have the confidence that their adviser also is learning and teaching, he adds. While he may not give Wakefield a degree in finance, Kingsbery arms him with the knowledge he needs, the band director says. "He's a student of the market."

Daniel T. Boatright, the senior associate dean in the University of Oklahoma College of Public Health in Oklahoma City, agrees. Although he did not have a financial adviser before Kingsbery, he believes it is fundamentally important "for anyone who has the sort of resources that need management to really get a grasp of what the options are."

Boatright also values the premium that Kingsbery places on educating him. "I think it's important for people to have the opportunity to distinguish between a service [provider who] treats them like a number at Baskin-Robins versus an individual who takes a personal interest," he says. "The single most important aspect of that relationship was building that level of confidence to ask what otherwise may be considered naive or simple questions."

If you are treated as a number and deal with a different person at an advisery firm every time you call, you feel less comfortable asking them very detailed personal questions, Boatright says.

"Terry is very good at asking in an unthreatening way, 'Do you understand this?' and I think that's very important. People who gain an appreciation for that level of personal interest find it not only very comfortable, but it boosts their confidence that decisions made are in their best interest," adds Boatright.

Boatright wishes all advisers were like Kingsbery. "Terry is a great example of [a person who makes a] personal investment of his time," he says. "We all invest our money with him, but he invests a lot of time in us."

 

Beyond the adviser level

Financial literacy is becoming a hot topic nationwide, too. In Pennsylvania, Becky MacDicken has been engaging employers in the state for the past five-and-half years to explain the benefits of financial education in the workplace and how to implement such programs.

As workplace financial education director in the Pennsylvania Office of Financial Education, she goes into businesses statewide and talks about what state officials are seeing from their offices, while encouraging employers to begin financial education programs. Should they agree, the state does not run the courses, but helps companies find providers based on their needs and price.

For state employees, Pennsylvania ran a "lunch and learn" program in which the employees took numerous courses. The "very successful" pilot attracted just over 400 unique attendees from four agencies, and the average person attended two out of the six classes, MacDicken says.

Surveys after the course showed direct and immediate changes by the employees. Three months after the course, 87% of attendees had taken some action to plan for their financial future and 93% requested more financial information.

Yet, private employers in the state continue to show resistance to begin the programs. It's been challenging to roll it out, MacDicken says. "It's a big state, so trying to get the focus [is difficult.] Our best success has been going through Society of Human Resources Management chapters."

HR directors tend to get it, she says. But, human resources staff are always dealing with other challenges, and while they realize financial education is an important topic, they often have something else more pressing on their desk.

"I've heard so many excuses why people haven't gotten their programs up and running," MacDicken says. "It's never at the top of the list; it just hovers there. Getting them going is a challenge."

Yet, it's of critical importance, and something that should even start when kids are young. "Parents are more willing to talk to kids about sex and drugs than money because they don't feel comfortable with it, either," she says. "Working adults feel like, 'I'm not equipped to teach this to my kids.' Teachers feel the same way, too."

 

The impact

Despite the resistance by advisers and companies to educate their clients and employees, there is a proven business case that financial education pays off and provides a strong return on investment.

In the last few years, there has been a tremendous shift of the burden for retirement to the retirees, who have less pension plan money and concerns about Social Security, says Liz Davidson, chief executive of El Segundo, Calif.-based Financial Finesse, a provider of financial education programs.

"You put all of that together, and there's a lot of pressure. We are kind of in a do-it-yourself economy now when it comes to planning for retirement," she explains.

Financial stress by employees leads to numerous direct and indirect costs for employers, she says. Among the direct costs are higher health insurance premiums and the fact that senior employees earn higher salaries than those employees who would ultimately replace them, "so the longer they [stay], that salary can become a bigger and bigger difference." And among indirect costs are younger employees who may leave as they do not see a career path at the company.

"We see a correlation between employees taking control of their financial life and taking control of their physical health," she says. "We hear from employers that launch these financial education programs that it translates into employees being more productive."

Research by the Personal Finance Employee Education Foundation, which promotes and faciliates financial education in the workplace, has found a 3-to-1 return on investment for companies providing financial education programs. According to the Alexandria, Va.-based non-profit's website, the ROI included "improvement in workplace productivity, employee morale, and company loyalty while reducing absenteeism, turnover, workplace distractions, and operational risk across the company."

 

More business, not less

For Kingsbery, financial education has been his life's work and will continue to be. He's not worried that explaining too much will lead to him losing his clients. People say that could happen, but he adds that those who do are not properly serving their clients.

"I never feel threatened that [clients] will go somewhere else," he says, as long as he continues to beat the market. "In bad times like 2008, most of our industry didn't react - they dug their own hole."

"We find the more we teach [clients], the less they are going to turn around and leave you," he notes. "Instead, business will just compound. Their accounts may start with $2,000, but what happens when they get an inheritance? Bingo."

As he learned in his first job in Oklahoma, which was to help the banks keep business, a customer will go to the person who has the higher interest rate, but a client will stick with you.

"Lots of times in the industry, we use grandiose terms, [but] what does this really mean?" he concludes. "That's why I really like serving people - I like to understand what it means to them."

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access