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Advisor Insights

Stop Teaching, Start Coaching

The limitations of the advisor-as-educator role.

While some advisors see client financial education as a primary service, others are not convinced that the practice has real value. Decades of academic research only serves to intensify the debate because studies can be found to both defend[1] and refute[2] the effectiveness of financial education. How do we make sense of all these (often conflicting) findings? Thankfully, a more recent and careful meta-analysis of over 200 studies on the effects of financial education points to an answer. This article summarizes these findings, as well as original work performed by Morningstar researchers, and offers practical steps to put the findings to use in your own practice.

Effects of Education
What does the research really say about the value of teaching financial concepts? Hundreds, perhaps even thousands, of studies have been conducted to measure the impact of financial education on people’s financial behavior. Some of these report increases (albeit small) in critical behaviors like saving and debt reduction, while others find no effect of education on behavior. To better understand what this collective body of work can tell us, a team of three prominent researchers carefully examined the results of 201 individual studies on financial literacy and education.[3] The meta-analysis led to two important conclusions:

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