Investor acquisition is pivotal in the wealth, banking, and insurance industries, requiring well-planned strategies and thoughtful execution. Since every investor has different financial objectives, risk appetites, and investment preferences, the starting point in acquiring them begins with imparting financial education. The Digital Wealth News team recently interviewed Teresa Leno, CEO and Founder of Fresh Finance, about how attracting prospects and turning them into clients starts with financial education.
Understanding the framework of financial education
“Financial education encompasses the professional management of personal finances, understanding of investment options, awareness of financial markets, comprehension of financial risks, and the ability to make informed investment decisions. Financial education is critical in molding a prospective investor’s approach to investigating and hiring an advisor.
Financial education helps build advisor trust and confidence, which are critical determinants of client acquisition. Financial education, therefore, acts as a catalyst in attracting prospects and turning them into actual clients,” says Leno.
She comments that financial education also nurtures the development of a deep-rooted relationship between investors, advisors, and financial institutions. It fosters transparency and creates an environment where investors feel more involved regarding their investments. Consequently, it aids investor retention and ensures a longer-term relationship based on trust and mutual respect.
Educate to help protect
Financial education can help mitigate the risks of investing in fraudulent schemes or making impulsive investment decisions. Moreover, it encourages prudent decision-making and responsible financial behavior, thereby minimizing investment risk.
“Financial literacy has become even more critical in an era of digitization and technology. The proliferation of online trading platforms and digital financial products has widened the scope of choices for retail investors. However, insufficient financial education before investing can lead to significant losses. Therefore, financial education acts as a lighthouse, guiding investors forward more safely in this sea of digital finance,” Leno adds.
Financial institutions striving to increase their investor base should prioritize financial education as an integral part of their strategy. Investor acquisition is a strategic and systematic process beyond simply having their advisors pitching investment products.
Attract, convince, acquire, and retain using financial education
Investor acquisition is vital to every business model. It involves attracting, convincing, and securing capital from potential investors, turning them into clients. However, industry professionals must know that the process of investor acquisition begins with something other than a meticulously planned pitch or an attractive financial planning proposal. They must ‘speak’ to an investor’s problems with a solution. Investors want to know their problems can be solved and that the organization works with others like them.
“A financially educated entrepreneur likely understands the importance of risk management. When looking for an advisor, they will want to know how the advisor will manage their unique risks because this significantly influences their decision-making and goals. Therefore, advisors presenting well-crafted, realistic, and executable strategies for entrepreneurs through blog content, social media, etc., are more likely to acquire them into their client base,” comments Leno.
In closing, Leno says that investor acquisition requires more than referrals, cold-calling, or an attractive financial plan. It requires demonstrating a strong presence of financial education in everything they do: social media, website content, blogs, newsletters, etc.
“It’s vital that organizations and advisors position themselves to attract potential investors and sustain their current client base using financial education as their value proposition,” she adds.
Click to Learn More About FreshFinance
Teresa Leno worked as a financial advisor and experienced firsthand the importance of financial education to help clients make more informed decisions before a crisis. Through her experience, Fresh Finance was started as a financial content marketing solution to help advisors validate their expertise through sharing content.
