Learn from Morgan Stanley Wealth Management Leaders Erin Beable and Charline Burgess as they foster education for Financial Literacy Month.
Erin Beable and Charline Burgess wish they had learned about finance in their younger years. As college students, both were bombarded with high-interest-rate credit-card offers then succumbed to the compounding effect of interest on their balances and fell into significant debt.
“If I had been taught as a teenager everything that I teach now, the landscape of my life could have been totally different,” says Charline, a Senior Wealth Education Specialist at Morgan Stanley Wealth Management.
Erin, a Financial Advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) with The Sauberman Beable Group at Morgan Stanley, is committed to financial literacy after it took her “a decade to get rid of the credit-card debt I accumulated in two years of university.” She now hosts events for parents and children to “educate and empower children and adults. Financial literacy really spans all ages,” says Erin.
Charline, in her role within Family Office Resources, delivers customized wealth education to the Firm’s clients and their families, ranging from age 5 to 55. “We teach the next generation of all ages to understand credit scores, track their spending, analyze cash flow and how to create and stick to a budget—and why those skills are important,” she says.
These topics and more are covered in her personal finance curriculum, which she also shares with Financial Advisors to teach themselves. Classes cover the power of compounding interest and steady savings, as well as debt management, identity theft, markets and investing, first-time homebuying, emergency funds, and estate planning. They also help the next generations discover their passions in philanthropy and how they can be philanthropic, including how donor-advised funds work. In addition, they provide education on family governance to help multi-generational families learn the skills to become good stewards of their family wealth.
Erin—who has facilitated wage-negotiation workshops as part of Morgan Stanley’s collaboration with the American Association of University Women (AAUW) and financial-literacy seminars for the Girl Scouts, including her daughter’s troop—believes financial literacy starts with an understanding that our money shouldn’t control us; rather, it is a tool to achieve our quality of life. “We should feel empowered by this tool rather than controlled by it.” She’s also a volunteer essay judge for the SIFMA Foundation, which draws on industry experts to provide financial education programs to youth.
But being financially literate “must start at a very young age,” says Charline. Money concepts, she advises, can start at ages 3 or 4. “It’s all about understanding what money/currency is, what savings are and why you save—determining if it is a want versus a need as well as if it is a short-, medium- or long-term goal,” says Charline.
Erin agrees, and often consults with families about making prudent spending decisions and setting good precedents for younger generations. This is especially important when she is helping clients prepare for a windfall from inheritance. She highlights the benefits of long-term Financial Planning for the entire family, and encourages clients not to focus on the short term gratification of a personal lifestyle upgrade.
Erin adds that wants and goals are not to be confused with performance: “Goals should not be about beating the S&P 500. Rather, they’re about the quality of life that you want. The want is what we plan for.”
Charline always starts with the concept of financial goal setting and says set goals should be very specific. “If your goal is to take a trip in three years for spring break from college your senior year, you must do the math problem to understand how much you have to save every year and every month to reach that goal,” she explains. “Repeat this process with all your life goals, breaking them down into digestible chunks.”
In doing so, it’s important that young people understand the concept of compounding and the wonder that can do for savings. “We like to look at charts of savers who start at age 20 versus age 40 to visualize the potential growth difference over that time,” says Charline.
You know, those kinds of conversations. So I said, you know, with the cars that you're driving right now, I understand the excitement of upgrading, but do you really need to, or is it just something that you want to, and you can push that down the road?
Erin and her team have budget conversations with every client at the start of the financial planning process. “When clients paint the picture of their quality of life and how much money they need per month to maintain that quality of life, it helps determine the asset allocation and the appropriate amount of risk for them to take within the investment strategy,” she explains.
Knowing some clients are afraid of judgment for spending too much or not saving enough, Erin emphasizes the need to be honest, often sharing her own past struggles with credit-card debt. “There’s no reason to feel uneasy,” she says. “It all comes down to financial literacy and being taught the tools to feel confident and empowered to live the quality of life you’ve worked for.”
Goals-based financial planning helps clients map out courses of action for their desired quality of life against a budget. Tools can help track a client’s spending and notify their advisor should the client start to get out of budget. “Sometimes we have to have intense conversations and remind clients what their goal is to help them get back on track,” Erin explains.
Another way to better understand and manage your entire financial position is through account consolidation. It can be challenging to keep track of accounts and investments held across multiple financial institutions. This especially applies to those approaching retirement, who might have multiple 401ks and IRAs from various jobs over the years.
“If you have a lot of small accounts at different places, not only is it more challenging to keep track of but, from an investment standpoint, you might be overconcentrating or underutilizing well-performing investments, adding to your costs,” adds Erin.
When clients don’t want to consolidate accounts, she suggests using Morgan Stanley’s Total Wealth View, where they can add their external accounts and have more informed wealth planning discussions.
Financial Advisors and experienced financial educators can help provide the next generation with the knowledge and skills for personal finance success. It can also foster confidence and trust to help preserve family legacies for generations to come. Financial literacy is the first step in the process.
For more resources to help you make smart financial decisions at any age or life stage, click here.