One of the hallmarks of the Dodd-Frank legislation is its new definitions of terms. For example, the definition of a family office and also of a family member has much more specificity than before. Financial literacy is another term whose definition is approaching a standard. By formulating standard definitions of such terms, it becomes much easier to regulate financial and wealth management.
Financial literacy has long been a focal point for wealthy families. Their insistence on financial and business education for their progeny has only become more firm. In terms of the general society, however, a standard definition
would be a benefit to investors as well as to those who advise them.
The lack of financial acumen by investors was an unforeseen component in the recent economic and financial crisis. Government’s interest in devising standard definitions is having multiple implications and effects in the wealth management world. It also may yield some unanticipated benefits.
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