It is not a secret that financial education is a big part of what we are trying to offer here at Provisio Retirement Partners. This very blog that you are currently reading, and its convenient podcast recordings, is one facet of those efforts. Our video recordings and Financial Planning Basics course are also ways that we are trying to provide valuable education to prospects and clients. Why are we doing this? First, it is our duty as financial advisors to make sure that our clients are educated about the planning topics we are talking about and that we are on the same page before they make any decisions. In that same vein, we want to ensure that we bring relevant information to our clients about different strategies and new laws and regulations that may affect them. Secondly, it is no secret that our schooling system has in many ways failed when it comes to financial education. When we are meeting with younger, less experienced clients one of the most common takeaways from our initial meetings is how thankful the clients are for us taking the time to go over some of the basics of retirement planning. Outside of an intro to economics course in high school, most young people in our state are not being formally educated on basic financial topics. Thanks to new legislation passed by our state government, that will not be the case much longer.
On June 16, 2022 the State of Michigan became the 14th state in this country to pass legislation mandating some sort of finance education. House Bill 5190 mandates that every student in this state must take a half credit course in personal finance in order to graduate high school. The law goes into effect for 8th grade students starting next school year, meaning that every student in the class of 2028 and beyond cannot graduate without having taken such a course 1. What types of information will these courses entail? It is assumed that basics such as how to write a check, how to invest your savings for retirement and short-term goals, and budgeting will be taught as part of the course. The main goal of the mandate is to equip young people with the knowledge they will need to succeed financially in adulthood. Perhaps the most amazing part about this legislation is not in fact the law itself but the fact that it passed bipartisan with flying colors. The bill passed the Michigan State Senate in a vote of 35-2, and the House by a vote of 94-13 2. Here are some quoted justifications for the law from the legislators who voted for it and the people who helped get the bill to the floor in the first place.
“As a mom, I want every kid who graduates in Michigan to enter the world with a diverse set of skills and knowledge, and that must include financial literacy,…” Gov. Gretchen Whitmer 1.
“Too many young adults are unprepared when it comes to making major life decisions, this legislation will give students the opportunity to learn and develop these skills early.” Rick Baker, President and CEO of the Grand Rapids Chamber of Commerce 2.
Speaking on the importance of high school education, “…prepare students for adult life. Personal finance should be part of that educational preparation…A financial literacy class will familiarize students with key financial concepts, helping them understand how to handle their personal budgets.” Former Rep. Diana Farrington who sponsored the bill 3.
From our perspective as advisors, we are very excited about this bill. Young adults are looking for information and help about personal finance topics. Teaching these things in school will help prepare students for the real world and keep them from making mistakes that put them in precarious positions. We also like this mandate because it means that our leaders are investing in the future generations and can see the value in better preparing young adults to make real-world personal finance decisions. We are excited to see these courses in action in our local public and private schools as well as how they cultivate informed investors and clients in the future. As always, thanks for reading this week’s blog.