Empowering Investors with Financial Literacy

Empowering Investors with Financial Literacy

Financial literacy is the need of the hour and a requisite for a prosperous future. There’s no doubt about the paramount difference that the education of finances can make in the lives of people.

Standing strong on the four pillars of debt, budgeting, saving, and investing, financial literacy is a life-altering aspect for one and all. Despite this, only 27% of Indian adults were financially literate, with significant variations across different states and demographics, as found in a survey conducted by the National Centre for Financial Education (NCFE) in 2019. This means most Indians are not prepared to tackle the most essential aspects of living a financially healthy life. This problem stays prevalent even among novice and experienced investors. 

As professionals in the arena of finance, you will come across many potential clients who are sceptical of investing because they need more financial literacy. Sometimes even seasoned investors can be daunted by investing in instruments other than the ones they have personally tried and tested. But this does not mean they cannot invest further or make informed decisions; they only need appropriate education and reliable guidance. So here’s a blog on why as a mutual fund distributor, you should educate and empower your clients with financial literacy.

Importance of Financial Literacy for Investors

  • Cultivating awareness for better decisions

    Client education and financial literacy empower investors to assess and understand the difference between wise and unwise financial choices. Fueled with knowledge, awareness and drive, investors will be able to engage better with investment options by asking the right questions and aligning better with expectations and potential outcomes. 
  • Understanding future financial needs

    The correct know-how of the financial world and economics, will help investors foresee their future financial needs and how external factors like inflation will affect them. This clarity of vision will let them prepare and plan better. They would also be able to choose the most suitable financial product for themselves.
  • Assessing & aligning risk appetite with expectation

    Educated investors will understand the intricacies of the financial product better. They will map and choose options that satisfy their risk appetite while giving them the desired returns. This will bridge the gap between the expectation and reality, eventually enhancing their satisfaction with the investment.
  • Developing financial resilience

    The amalgamation of financial education and reliable support and guidance will aid investors in building resilience against predatory practices and unsuitable financial products. They will be better equipped to care for and nurture their financial health.
  • Discerning reliability of source

    In the era of information overload, misinformation is prevalent. Educated investors will know which source to trust and invest time in. They will follow a multifaceted approach to prioritise professional guidance over what a finfluencer (financial influencer) might have suggested on any online platform. 

By tracing the scope of financial literacy for your client, you can lay the foundation for a more secure and prosperous financial future. You can also rely on holistic platforms with ready resources to gain financial knowledge like NJ FLAP to back you further with apt information. This will also build your credibility as their well-wisher, induce trust and build a stronger relationship. Thus, as a mutual fund distributor, you should educate your clients financially and empower them to make informed financial decisions.