EDITOR’S NOTE: The Retirement Advisor Council (RAC)—which advocates for successful qualified plans and participant outcomes through the collaborative efforts of experienced retirement plan advisors, investment firms, asset managers, and service providers—is reaching out to advisors across the country to learn more about their focus on financial literacy and the opportunities for our industry to make a meaningful impact. In this first of a series of articles, the RAC talks to Honolulu-based advisor Karen Yasukawa to learn what she sees as successes, failures and opportunities in her home state.
Americans continue to struggle with financial literacy. The reasons are complex and personal. To complicate matters, each state has unique and specific factors that can influence the overall financial literacy and financial security of its citizens.
The great recession of 2007-2009 revealed a great deal about the savings and investing habits of Americans. The Coronavirus pandemic then served to reinforce the gaps in financial literacy and to underscore the need for personal financial education for Americans.
Some states have responded by implementing personal finance programs. Others have not. To learn more about what’s happening on this front across the country, the Retirement Advisor Council (RAC) spent time with a number of retirement advisors to gain insights into current financial literacy climate.
First up is Karen Yasukawa, CIMA, AIF Senior Vice President, Investments; Senior Institutional Consultant at The Kikawa Group, a Raymond James advisory team based in Honolulu. For more than 30 years, Yasukawa has served as a consultant to institutional retirement plans, endowments and foundations, and Taft-Hartley joint-trusteed plans. She is the team’s principal consultant assisting clients in developing and implementing their defined contribution retirement programs. She was named a 2015, 2016, and 2017 Top 401 Retirement Advisor by the Financial Times and was named to the NAPA Top Women Advisors—All-Stars in 2019 and 2021.
RAC: Thank you for speaking with us today. To begin, could you tell us a bit about your practice?
Yasukawa: We don’t specialize in sectors or types of employers. I work with multi-employer clients, corporations, small businesses, and start-ups. Hawaii is a union state and I have experience with Taft-Hartley plans as well.
RAC: What types of services are you making available to your clients?
Yasukawa: That all depends on the client and what their plan goals and objectives are. I can offer investment and plan monitoring, consulting, participant education, and of course fiduciary services. That’s the foundation. We support our clients’ efforts to develop investment policy statements. We’re also able to work with their attorneys and plan administrators. In Hawaii you have to be a bit of a generalist.
RAC: How about participant education and one-on-one meetings?
Yasukawa: We have an excellent suite of programs through Raymond James that we can use to work with participants. We can rely on the retirement plan service provider or even the sponsor to supplement that if we need. It’s about responding to the needs of participants. We have challenges here in Hawaii in terms of financial literacy. Many participants (and Hawaiians in general) may not really understand the ins-and-outs of the markets. There is a need in our population to understand both the short-and long-term value of investing.
Clients are very supportive of group meetings. Often, they mandate attendance. My clients also encourage employees to take advantage of the one-on-one meetings. The one-on-one meetings can be very effective in terms of changing behavior and attitudes.
RAC: Can you speak a little bit about the local factors in Hawaii that may impact a participant’s overall financial wellness?
Yasukawa: Hawaii is unique. The overall cost of living in Hawaii is very high and is among the most expensive places to live in the U.S. Hawaii is more diverse than people may understand. Culture affects our attitudes towards money, saving and investing. For example, there is a significant Asian population in Hawaii. Culturally, this population is looking to save and protect their money. I know this is a generalization but the predisposition here is to invest in the money market, stable value or guaranteed products. This isn’t about keeping up with inflation but rather holding onto their money.
For native Hawaiians, saving and investing and overall financial literacy is not top of mind. Real estate is the financial goal of many Hawaiians, and it is very expensive. In fact, the cost of living in Hawaii is 95% higher than the national average (according to data from Payscale.com). Purchasing homes or apartments is difficult. But there is a true focus on land or home ownership.
RAC: We are seeing some interest in national standards for financial literacy and eight states have adopted those standards. Your thoughts?
Yasukawa: Hawaii is a complicated place. And education is too. Our schools are ranked low compared to the rest of the United States for reading and our teachers also struggle. Parents who can afford it, and even some who can’t, send their children to private school. Some of the private schools are quite good. However, many of our youth leave Hawaii after high school for an education and never return to live full time. There is no state mandated program for financial literacy.
RAC: What is the best way to teach financial literacy?
Yasukawa: Financial literacy is a language. This isn’t something that can be fixed in a year. Not anywhere and certainly not in Hawaii. Schools are attempting to see what they can do to include it in curricula, but it isn’t really getting traction.
Financial literacy is being taught, though. It’s so interesting while it is not in the standard curricula it can be found in organizations such as ROTC, and the Girl and Boy Scouts. There are perhaps opportunities to include financial literacy classes in churches or other civic organizations. We as an industry can and should think creatively about how to develop and deploy financial literacy programs for our children. And like learning a language, the earlier we start the better.
RAC: How might you define “financial literacy?”
Yasukawa: Essentially financial literacy describes the combination of skills, knowledge, and tools that empower people to make good financial decisions. Ultimately, I want people to experience a sense of financial wellbeing and confidence so they have control over their finances and can weather financial storms. It will take a commitment from us as an industry to work with our communities, cities, and states and be willing to go into the schools to perhaps offer our services at that level.
RAC: Thank you so much for your time. This has been an important conversation.
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The Retirement Advisor Council (RAC) advocates for successful qualified plans and participant outcomes through the collaborative efforts of experienced retirement plan advisors, investment firms, asset managers, and service providers. The Financial Literacy Committee of the RAC is launching a collaborative initiative to influence enhanced financial wellness and retirement security by advancing financial education through volunteer and advocacy efforts. As part of getting this initiative formally underway, the RAC is reaching out to advisors across the country to learn more about their focus on financial literacy and the opportunities for our industry to make a meaningful impact.
