Calif. signs law requiring high school finance education class

California Gov. Gavin Newsom recently signed AB 2927, which requires high-school students to take a personal finance education course to graduate. Schools are required to offer the course by the 2027-28 school year and make it a requirement for graduation by 2030-31.

Many financial organizations and firms have applauded this move, citing the numerous benefits of financial education and financial literacy. For example, the 2024 Financial Planning Association President, Claudia Kane, said that “this legislation underscores our shared belief in equipping students with the knowledge and skills to make informed financial decisions, and we are proud to have been at the forefront of these advocacy efforts. We cannot overstate the significance of this momentous advancement in personal finance education. For FPA and all other staunch financial literacy and wellness advocates, this is a moment in history that will positively impact future generations of savers and investors throughout California.”

Benefits of educating your clients

The FPA said that with the passage of AB 2927 in California, more than half of U.S. states have now passed similar laws, largely in response to the country’s epidemic of financial illiteracy and the resulting loss of billions of dollars by families without the knowledge to maintain financial wellness in adulthood.

As they seek to lower the high level of financial illiteracy in this country, several industry groups have also launched financial-literacy campaigns. For example, each April, various organizations take part in National Financial Capability Month, during which they highlight the importance of providing financial education to consumers so that they can make informed decisions about their finances. Financial capability is a key part of ensuring that American consumers build financial security and take advantage of opportunities that help them reach their financial goals.

The groups that champion consumer financial education have good reasons for doing so—they are keenly aware of the many benefits that financial education bestows on students and adults alike. So, what are some of these benefits? “I would argue the biggest benefit is the level of trust that can be created between the advisor and the client,” said MDRT member Bryson Milley, financial advisor and portfolio manager at RGF Integrated Wealth Management. “If the client has a base level of financial literacy, they are much less likely to fear or be confused by a financial discussion with an advisor. At the same time, it allows the client the confidence to ask questions in an effort to further understand and/or confirm the integrity of the advisor. No matter which way you look at it, knowledge helps alleviate confusion and uncertainty.”

Echoing these sentiments is another MDRT member Stacy L. Kahan, founder of 1706 Advisors. As she said, “clients with financial literacy make better decisions, reducing anxiety and fostering proactive planning. We see clients more engaged as they develop a curiosity and understanding of the importance of financial independence. At 1706 Advisors, we boost literacy through personalized education, clear resources, and ongoing communication.”

Educating clients

Milley said that initially with each of his clients, he takes them through a short Financial Planning 101. “My intention is to give them context of the planning we will do, how it will be uniquely tailored to them, and how financial tools/products/methods may fit into their plan,” he said. “Being able to root the details in their own personal situation, the easier it is to understand how it works. Understanding, context, and trust is everything in making sound financial decisions”.

For what it is worth, Milley said that he supports an initiative like the signing of AB 2927. Every individual has their own income and expenses, and the sooner young people understand the mechanics of money, the more financially stable they will become. And societally, that can only be a good thing, he added. “Imagine a community full of nothing but financially confident individuals who will almost always make sound financial decisions! This isn’t to say everyone will have large amounts of money, but to say, wouldn’t it be good if people made wise financial decisions with the money they have? I have said this to many people, when I think back to the classes I took in high school, by far the two most practical classes I took were Typing 10, and Accounting 12. I’d be lying if I told you I took the accounting class because I was interested. No. I took it because I heard it was easy! Ironically, long before I became a financial advisor, the lessons I learned in that introductory accounting class were invaluable when it came to managing my money.”

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