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Blog

There is more to financial literacy than Wall Street

Tisa Silver

Last week, I read a MarketWatch post by Paul B. Farrell entitled, “Financial literacy is a big, fat Wall Street hoax.”

As an educator and advocate of financial literacy, I can tell you from first-hand experience the assertion in this article’s title is simply untrue. However, I found plenty of truth in the subtitle, “7 reasons the pros don’t want investors to be savvy.”

If every investor knew and accepted that with Wall Street there are (1) no guarantees, no perfect forecasters and not even a solid history of professionals who “beat the market,” and (2) a plethora of professionals with ever-changing expectations acting upon educated guesses, then what would be the point of paying for certain services of a Wall Street professional?

Mr. Farrell’s reasons why Wall Street would oppose savvy investors may be valid, but the one-dimensional view of financial literacy presented in his post gives undue credit to Wall Street as a determinant of how effective, or ineffective, financial literacy campaigns can be.

Financial literacy is not limited to Wall Street, and not even to the topic of investing. One can only begin to invest when he or she has enough capital available to do so. Many audiences I deal with are not at that point, which leaves me plenty of topics to cover along their path to becoming financially literate. By design, topics such as saving, credit, insurance, banking, entrepreneurship and taxes are explored long before Wall Street.

Even still, people often tell me I should have my own “money show” and that I am so smart I should move to New York to make millions on Wall Street. The suggestions are flattering but I laugh them off and often joke that Wall Street folks do not flock to me or my material because I discount their expertise on a regular basis. Like Mr. Farrell, I understand the role ignorance plays in their business model.

For the record, I do not think all Wall Street professionals are bad or that none of them can provide valuable services. There are simply some services which are oversold and in my opinion, result in too many investors paying the price for expectations which may or not be met.

The bottom line: Wall Street is one component of financial literacy, it is not the focus. When your assets are at stake, the best thing to do is to become literate because ignorance is a profitable business. Continued ignorance ensures continued profits.

Also, be mindful of the fact that while Wall Street may be the punching bag of the moment, it is not the only industry that capitalizes upon the ignorance of its clientele.