scholarly journals How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages

2019 ◽  
Author(s):  
Hugh Hoikwang Kim ◽  
Raimond Maurer ◽  
Olivia S. Mitchell
Keyword(s):  
Cognitive Ability ◽  
Financial Literacy ◽  
Financial Advice

Retirement concerns and financial literacy in Brunei

2020 ◽  
Vol 40 (3/4) ◽  
pp. 342-365
Author(s):  
Pg Md Hasnol Alwee Pg Hj Md Salleh ◽  
Roslee Baha
Keyword(s):  
Financial Literacy ◽  
Home Ownership ◽  
Pension Reform ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Content Type ◽  
Financial Advice ◽  
Knowing How ◽  
Retirement Plan

PurposeDespite the inclusion of financial literacy in retirement studies, there are limited studies that look into retirement concerns and how financial literacy plays a role in managing retirement concerns. Understanding retirement concerns prior to retirement is important given how it affects retirement satisfaction. Therefore, this paper aims at assessing the retirement concerns in Brunei and the role of financial literacy in managing those concerns.Design/methodology/approach700 government employees, divided into three groups, were interviewed: Defined Contribution Plan (DCP) employees retiring in the next 10–15 years, DCP employees retiring in 20–30 years' time and Defined Benefit Plan (DBP) employees retiring in the next 10 years. Pearson's chi-square tests and logistic regressions were used to ascertain significant relationships.FindingsThe results indicate the relatively younger DCP group is more likely to be financially literate compared to senior groups however, these respondents are more inclined to focus on private home ownership at this juncture. The findings also indicate the importance of knowing how much to save for retirement towards determining those with an additional retirement plan, and consequently reducing their retirement concerns. The value of financial advice is also significant in determining the amount to save for retirement and in possessing an additional retirement plan.Research limitations/implicationsResults cannot be generalised to the population, as purposive sampling was utilised due to the absence of a population frame.Practical implicationsThe implications of the paper may provide value to policymakers to consider approaches to enhance the quality of financial advice and provide sound knowledge in computing the amount needed for retirement. Understanding the role of financial literacy vis-à-vis retirement concerns may also be useful for neighbouring countries with similar socio-cultural aspects such as Malaysia.Originality/valueGiven the limited research on retirement concerns and financial literacy, this paper is one of the few to emphasise on the importance of knowing how much is needed to save for retirement, in relation to retirement concerns. This may also be useful in other countries/communities with similar retirement context such as those with relatively low retirement planning or with similar retirement schemes. Further, with the 1993 pension reform, there is no known publication on retirement concerns and expectations in Brunei. Left unchecked, it may lead to poverty in old age and/or dependency on welfare institutions and family support.

scholarly journals Credit counseling: a substitute for consumer financial literacy?

2015 ◽  
Vol 14 (4) ◽  
pp. 466-491 ◽  
Author(s):  
RICHARD DISNEY ◽  
JOHN GATHERGOOD ◽  
JÖRG WEBER
Keyword(s):  
Financial Literacy ◽  
Consumer Credit ◽  
Safety Net ◽  
Financial Situation ◽  
Financial Advice ◽  
Credit Counseling

AbstractIs financial literacy a substitute or complement for financial advice? We analyze the decision by consumers to seek financial advice in the form of credit counseling. Credit counseling is an important component of the consumer credit sector for consumers facing debt problems. Our analysis accounts for the endogeneity of an individual's financial situation to financial literacy, and the endogeneity of financial literacy to exposure to credit counseling. Results show counseling substitutes for financial literacy. Individuals with better literacy are 60% less likely to use credit counseling. These results suggest that credit counseling provides a safety net for poor financial literacy.

scholarly journals Financial literacy, financial advice, and financial behavior

2017 ◽  
Vol 87 (5) ◽  
pp. 581-643 ◽  
Author(s):  
Oscar A. Stolper ◽  
Andreas Walter
Keyword(s):  
Financial Literacy ◽  
Financial Behavior ◽  
Financial Advice

scholarly journals FINANCIAL ADVICE, LITERACY, INCLUSION AND RISK TOLERANCE: THE MODERATING EFFECT OF UNCERTAINTY AVOIDANCE

2021 ◽  
Vol 24 (4) ◽  
pp. 105-123
Author(s):  
Gentjan Çera ◽  
Khurram Ajaz Khan ◽  
Zuzana Rowland ◽  
Humberto Nuno Rito Ribeiro
Keyword(s):  
Financial Literacy ◽  
Negative Relationship ◽  
Uncertainty Avoidance ◽  
Risk Tolerance ◽  
Partial Least Square ◽  
Financial Inclusion ◽  
Least Square ◽  
Special Focus ◽  
Financial Advice ◽  
Financial Behaviour

The aim of this paper is to investigate the determinants of financial advice with a special focus on the cultural role in the influence of risk tolerance on seeking advice for financial issues. Financial literacy is covered by financial attitude, behaviour and knowledge. Financial inclusion is the other factor considered in the conceptual framework, as an indicator which can enhance both financial behaviour and financial advice. The research is based on primary data collected in two European nations, manifesting differences in culture, which gives the possibility to test the uncertainty avoidance role in the above relationship. This particular focus is the novelty of this work, as it sheds light on the importance of culture while designing policies with the aim to enhance individuals’ financial literacy and advice. The hypotheses are tested by using Partial Least Square- Structural Equation Modelling (PLS-SEM) method. It was found that financial behaviour improves as financial inclusion gets better, along with financial attitude and knowledge. Furthermore, financial advice is positively influenced by financial inclusion and risk tolerance and partly by financial literacy. Additionally, findings demonstrate that culture does matter in explaining differences between countries. Culture in this paper is represented by uncertainty avoidance, as one of the Hofstede’s culture dimension. Individuals from countries that manifest a very high preference for avoiding uncertainty reflect a negative relationship between risk tolerance and financial advice. The paper offers useful insights for policymakers and industry leaders in understanding the most influential factors on financial advice. This enables them to scheme policies and services aimed at equipping citizens with knowledge and skills to make the best use of their financial resources.

scholarly journals Factors Affecting Financial Literacy and Financial Behaviour of Investors in Pakistan

2020 ◽  
Vol 1 (3) ◽  
pp. 80-90
Author(s):  
Muhammad Junaid Khan ◽  
Dr. Faheem Aslam ◽  
Syed Nisar-Ul-Mulk
Keyword(s):  
Cognitive Ability ◽  
Financial Literacy ◽  
Self Efficacy ◽  
Structural Equation ◽  
Research Study ◽  
Positive Impact ◽  
Financial Behavior ◽  
Equation Modeling ◽  
Financial Socialization ◽  
The Impact

The main purpose of our study is to find out the impact of financial socialization, cognitive ability, and self-efficacy on financial literacy and financial behavior of investors in Pakistan. This study has used a non-probability convenience-based sampling technique for collecting the data. A total of 429 individual investors were analyzed with the help of structural equation modeling (SEM) through Smart PLS. The results of our research study suggested that the participation of female investors as compare to male investors is very low. The main results of the study showed that cognitive ability and self-efficacy have a significantly positive impact on financial literacy, but an insignificant impact of these two variables on financial behavior was found. Findings also suggested that the influence of financial socialization on financial literacy is insignificant, while financial behavior is positively influenced by financial socialization and financial literacy. In mediating analysis cognitive ability and self-efficacy have positively affected financial behavior, while financial socialization has an insignificant effect on financial behavior through financial literacy. This research study provides important implications for researchers and other policymakers. Policymakers can formulate policies regarding trainings to improve the financial literacy of investors. Researcher can further investigate these variables for other segments of the society.

Financial Literacy and Defined Contribution Pensions

2012 ◽  
Vol 44 (5) ◽  
pp. 280-290 ◽  
Author(s):  
John A. Turner ◽  
Dana M. Muir
Keyword(s):  
Financial Literacy ◽  
Conflicts Of Interest ◽  
Financial Education ◽  
Defined Contribution ◽  
Financial Advice ◽  
Financial Decisions ◽  
Defined Contribution Plans ◽  
Individual Accounts

The increasing importance of defined contribution plans, both as employer-provided plans and as mandatory individual accounts, has increased the responsibility placed on workers for making financial decisions. While early on it was assumed that workers would be capable of managing these accounts, studies have documented that many workers make financial mistakes. Financial education has been used as a remedy, but experience has shown that many workers are not interested and others do not follow up on changes they indicate they intend to make. The use of defaults for investments and increased transparency concerning fees are two further developments that have addressed this problem. Now, attention is turning increasingly to financial advice. However, often financial advisers have conflicts of interest that affect the quality and cost of the advice they provide. Some countries are enacting laws that address this issue.

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