How does giving a child a piggy bank at 4 years old make them a more sophisticated and likely wealth management client in the future?
The minds behind a fintech startup focused on boosting the nation's
On Friday,
Developed with the support of experts like
And to do it, Bento is leveraging the client relationship management software that advisors already interact with on a daily basis. Through alerts and educational guidance, advisors can position themselves as experts who can help their clients promote financial literacy in their households.
Philipp Hecker, CEO at Bento Engine, told Financial Planning that the time to get to work on this problem was yesterday. He believes the greatest wealth transfer in history is already well underway, but many children primed to become top earners in the future remain indifferent to their parents' financial advisors.
Bento's new program wants to create deeper trust between parents and planners — the kind of trust that will trickle down along with a parent's assets.
"Parents want to do the right thing. They know that this stuff matters. They know they have to start early. But oftentimes, they don't quite know when and how to exactly do that," Hecker said. "And advisors want to connect with the next generation of the client's family. At least the smart and strategic ones do. But they, too, oftentimes, don't quite know when and how to do that. So we're helping by pointing out when to contact folks on what topic, and in what way."
According to FINRA, the nation's financial literacy decline is steady and staggering. In 2009, 42% of adults demonstrated high levels of financial literacy as measured by a widely used five-question
The quiz tests knowledge about interest rates; inflation; the relationship between interest rates and bond prices; the difference in payments between a 15-year mortgage and a 30-year mortgage; and if buying a single company's stock provides a safer return than a stock mutual fund.
The number of Americans who exhibited high financial literacy via the test dropped to 34% in 2018, and FINRA officials said current data still being compiled suggests that number is lower today.
And evidence suggests there is a need for accessible, age-appropriate financial advice. According to
The poll also finds that nearly three-quarters of teenagers don't feel confident with their personal finance knowledge, while one-third of teens don't know the difference between a debit card and a credit card. Additionally, 80% of parents are actively seeking additional resources to engage their children around financial issues.
Doty, a fellow of the University of Texas System Academy of Distinguished Teachers, said while there is a great deal of interest in financial literacy right now, the sheer amount of information out there can be too much for parents and grandparents who want to tackle the problem head on.
She added that there is also a need to meet young people, who are more interested in finances than previous generations, where they are.
"And when (parents) begin to search on their own, they get overwhelmed. How much is too much information? What are my kids ready for?" Doty said. "And I think (with Bento) we have taken educational standards that are common across the country in the world, in terms of readiness to learn and interest in a topic, and supporting what may be something that is happening at their schools or with their friends who are in their social groups. And we have given families the catalyst to have conversations.
"But what's more important is that it's going to spark the interest. And spark the conversation. And begin the process of setting up regular milestones and doing something different."
She adds that she often talks to people about what is "too soon" to teach your child about money. But early lessons about making smart choices can become a foundation for more complex lessons down the line.
"Teaching them you can have this or you can have that," she said. "And that becomes a framework for everything else that they're going to learn."
Bento's new tool has financial advice targeted specifically to ages 4 to 18. At 4 years old, children learn how to save with a coin game and a clear piggy bank that gives them the gratification of seeing their earnings grow. At 6 years old, two additional banks are added: one for spending and one for giving that supplements the lessons they've spent the past two years learning about saving.
Things like allowance, getting your first job and preparing to finish school are all part of the educational journey Bento wants advisors to be a big part of.
"It's basic, simple, yet powerful stuff," Hecker said. "And those simple, time-tested, proven tools and activities are what we want to make sure folks avail themselves of."
Hecker said the new program serves as a complement to Bento's existing milestone-related financial guidance offerings, called "Life in Numbers" and "Life Events." Those tools, also integrated into an advisor's CRM, aim to deliver timely and actionable information based on life milestones and age markers.
Examples of these milestones include age 50 catch-up retirement contributions and age 62 Social Security benefits.
But Hecker said getting an advisor to act on alerts isn't always easy. Not because of an unwillingness to do, but because the modern financial advisor is already swamped by an increasing list of responsibilities. He said Bento aims to go beyond alerts by making sure each update pushed to an advisor has already done the work for them.
For example, when a client's child turns 14 and is old enough to work, the alert reminding an advisor of that important milestone comes with talking points to help wealth managers start that conversation. And if that child is interested in getting their first job, all of the necessary work permit documentation is pushed along with the update.
"There is a need and opportunity to bring better advice beyond investing to more American families," Hecker said. "We're thrilled to do that through human advisors because we believe that even today and going forward, advice should still be delivered by warm-blooded humans to warm-blooded humans. But supported by smart and powerful technology."
