Type FLM into the search field at www.acronymfinder.com and you'll get "fun little movies," "fuzzy logic model," and "fun, love, and money." Type in PPA and you'll get "peasants per acre" and "pesticide producers' association." Go a little further down the list, however, and you'll find just what PPA and FLM mean to the insurance industry: the 2006 Pension Protection Act and the Financial Literacy Movement, a new way to market your services and products.
While PPA and FLM do not yet carry the status that popular boardroom acronyms such as KISS ("Keep it simple, stupid") have attained, they really should be at the top of every smart advisors' marketing plan. Why? Because the PPA and the FLM constitute an emerging market opportunity that few advisors are prepared to capture. And given that April is Financial Literacy Month, there's no better time to explore this resource.
Emerging market opportunities: rare but real
Think back to the early '70s, when "seminar selling" first appeared as a viable marketing medium. Systems such as Emerald, Successful Money Management, and others quickly sprang up and flourished. But as seminar systems moved into the mainstream, their effectiveness began to languish. As good as the seminar methodology is, communities began to experience a kind of "burned over" effect as wave after wave of seminar mailers, brochures, and invitations drowned suburban neighborhoods.
Now, thanks to FLM, a new emerging opportunity is gathering momentum. Fueled by various state and federal government initiatives, the rising tide of baby boomer retirees, and the Pension Protection Act, the acronym FLM and the movement it represents is reaching critical mass.
A brief history of FLM
Literacy has always been an important part of the American psyche. In the early 18th century, Congress passed several important bills to support reading and writing as a basic right for all Americans. Today, financial literacy is enjoying the same federal support. For example, in 2003, Congress passed the Financial Literacy and Education Improvement Act. In turn, this act created the federal Financial Literacy and Education Committee. Then, in 2004, the GAO (Government Accountability Office) charged the committee with creating a national strategy for financial literacy. Under this mandate, the committee published a 140-page roadmap titled, "Taking Ownership of the Future," a 1-800 financial hotline, and a comprehensive self-help Web site. In addition, the committee pledged that the "federal government would use its influence, authority, and 'bully-pulpit' to make financial literacy a national priority."
Further, determined to make financial literacy part of the warp-and-woof of America's corporate mentality, in 2006 Congress inserted a far-reaching clause in the text of the PPA that is known as the "Worksite Education Provision." In summary, the provision deeply relaxes the liability rules that have restricted employers from providing financial education to their employees.
A crack in the iron door
One primary result of the PPA for financial services practitioners is a crack in the iron door of corporate America. For years, even decades, advisors have eyed the closed compound of corporate America's broad employee base as a virtually untapped market. Sure, we can call on working adults, who, at home, after a hard day, are parked in front of their favorite sitcom. But who wants to be an intruder? Daytime activity is better; still, one has to move around the labyrinths of work schedules. Could there be a better way?
What about teaching groups of adults the importance of financial responsibility right where they work? Would the corporate world stand for such a thing? Well, they would and they are, and for more then one good reason. Take, for example, one recent study by the HR consulting firm Hewitt Associates, which states, "The return on investment for employers who even slightly improve the financial well-being of employees is $450 per individual through lower absenteeism and more productivity." The Association for Financial Counseling and Planning Education, reports, "Financial stress is rated by workers as their number one source of stress; concerns about personal finance are five times greater than those regarding health." In fact, "34 percent of workers rate their financial stress as high to extreme" and "80 percent of workers report using work time to deal with financial issues." Dr. Thomas Garman, professor emeritus at Virginia Tech University, notes, "A worker who is financially distressed is taking a direct bite out of the organization's profits."
How is the corporate world responding to this news? A Society for Human Resource Managers study reports that 65 percent of their respondents say top management is "somewhat to very interested" in providing financial advice to their employees. In addition, 49 percent of these companies are in the "initial research and considerations" stage of providing this education.
