April 2020

I wrote this article before the current isolation situation but I feel that it gives us all something else to think about during this strange time.

I meet clients from time to time who use the expression ’I have a blank about money’ and to some this statement is almost a ‘badge’ of superiority – it says I have more important things to think about in my life than thinking about money. I would suggest that it is also an expression used by those with a lack of numeracy. It is not their fault that they have a lack of numeracy, it is the fault of society. For National Numeracy Day 2019 OPSOS MORI in partnership with the Policy Institute at Kings College London and National Numeracy carried out a survey of 2,000 adults aged 16 -75 to assess levels of numeracy.  The data gathered for this report is remarkably consistent with other sources, which all suggest that around half of working age adults have the everyday maths skills that we expect of primary school children and only around a quarter are at or above the level that we expect of a 16-year-old. The results also confirmed remarks I hear from my clients – 3 in 10 people surveyed said ’they were not numbers people’ and women were more than twice as anxious as men about maths and numbers.

This leads me to consider in this article how we can help people with a lack of numeracy manage their money. In this definition of people with a lack of numeracy I am including very bright, clever people who have high levels of communication and writing skills but not necessarily of numeracy. I have many of these people as clients, they may well have introduced themselves by saying they have inherited a certain amount of money and when I eventually meet them I will discover that they have frequently ‘added’ or extracted the final 0 from the figure in question. For them the number in itself makes no sense or difference to their lives.

It is important that from the start that you work with the client to turn around the fear of numbers because otherwise this fear will lead to feet of clay and money will languish in Building Society Accounts or even worse the person may be ‘persuaded’ to invest large amounts of money in one project which has been portrayed as producing high returns. The lack of numeracy means that it is difficult for the person to question these numbers with confidence and they can be swept along with disastrous results. Take for example the steel workers in Port Talbot who were persuaded to remove their money from safe final salary schemes into risky investment schemes, this poor advice worked solely on the back of poor numeracy and the lure of a ‘big number’.

How can we help?

When helping someone with a blank about money the secret is to play to their skills which are usually more creative. We do this by presentation. Instead of  outlining a financial plan on a spreadsheet, we retain the spreadsheet but  the figures can be transposed to a colourful picture/graph, now instead of looking at a page of meaningless figures the person is looking at  a colourful chart which indicates from time to time when the investment is withdrawn to achieve some required outcome such as retirement income or paying for a holiday. The same graphic is then used consistently to update the plan.

How else can we help?

We can help by getting the client ‘involved’ in their investments, helping them to understand about the companies in which their money is invested. Many people want to feel that their money is invested in companies who are producing goods or services which improve the economy or governance. This can be discussed with clients and a well-diversified portfolio can be created to produce returns which at least keep pace with inflation. Clients who have been introduced to investment in this way soon become interested in the companies as much as the returns and once you have achieved the interest and participation, you can move to the next stage.

How else can we help?

Once a client has a plan presented in a format they understand – usually words rather than numbers and an interest in the underlying companies in the portfolio, you most probably have the client’s attention and then you can consider more long term planning for them and their family. I can tell you from experience that they will grow in confidence from there, they will start to ring up to discuss articles they have read and they will no longer have a blank about money, they may have a blank about numbers but not about what they can do with their money