An Examination of Demographic Differences in Obtaining Investment and Financial Planning Information

Bechly, Paul (2018): An Examination of Demographic Differences in Obtaining Investment and Financial Planning Information. Published in: SSRN (13 May 2019)

Abstract

Financial literacy and financial education are important components of modern life. The importance of financial literacy is increasing for financial consumers because of the weakening of both government and employer-based retirement systems. Unfortunately, empirical research shows that financial consumers are not fully informed and are not able to make proper choices even when appropriate information is available. More research is needed as to how financial consumers obtain investment and financial planning information. A primary data study was conducted to understand the differences between the demographic categories of gender, age, education-level, and income-level with the means of obtaining investment and financial planning information. In this research study, which selected a population from the LinkedIn platform, statistical differences between gender, age, education-level, and income-level were confirmed. These differences helped to confirm prior research in this field of study. Practical opportunities for commercial outreach to specific populations became evident through this type of research. Providers of investment and financial planning information can access their targeted audience more effectively by understanding the demographic profile of the audience, as well as the propensity of the demographic profile of the audience to respond. As this type of research is relatively easy to construct and administer, commercial outreach for providers of investment and financial planning information can be conducted in a cost-efficient and effective manner.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial consumers, financial demographics, financial education, financial literacy, financial planning, financial self-efficacy, investment planning
• Subjects: A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics

References

Almenberg, J., & Dreber, A. (2015). Gender, stock market participation and financial literacy. Economics Letters, 137, 140-142. https://doi.org/10.1016/j.econlet.2015.10.009

Behrman, J. R., Mitchell, O. S., Soo, C. K., & Bravo, D. (2012). How financial literacy affects household wealth accumulation. American Economics Review, 102(3), 300-304.

Collins, M. J. (2012). Financial advice: A substitute for financial literacy? Financial Services Review, 21(4), 307-332.

De Mesa, D., Irlenbusch, B., & Reyniers, D. (2008). Financial capability: A behavioral economics perspective (Consumer Research Report 69). London: Financial Services Authority.

Facebook IQ. (2016, January). Millennials + money: The unfiltered journey (Insights whitepaper), Menlo Park, CA: Facebook

Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60(8), 1861-1883. https://doi.org/10.1287/mnsc.2013.1849

Fogel, S. O., & Berry, T. (2006). The disposition effect and individual investor decisions: The roles of regret and counterfactual alternatives. The Journal of Behavioral Finance, 7(2), 107-116. https://doi.org/10.1207/s15427579jpfm0702_5

Fonseca, R., Mullen, K., Zamarro, G., & Zissimopoulos, J. (2012). What explains the gender gap in financial literacy? The role of household decision making. Journal of Consumer Affairs, 46(1), 90-106. DOI: 10.1111/j.1745-6606.2011.01221.x

Fraczek, B. (2014). Main purposes and challenges in the financial education of financial consumers in the world. Journal of Economics & Management, 16, 27-43

Han, J. J., & Jang, W. (2013). Information Asymmetry and the financial consumer protection policy. Asian Journal of Political Science, 21(3), 213-223. https://doi.org/10.1080/02185377.2013.864511

Harrison, T. (2003). Editorial: Understanding the behavior of financial services consumers: A research agenda. Journal of Financial Services Marketing, 8(1), 6-9. https://doi.org/10.1057/palgrave.fsm.4770102

Hean, S., Worswick, L., Fenge, L., Wilkinson, C., & Fearnley, S. (2013). Keeping informed during times of economic downturn: the trusted amateur as a preferred source of financial information. Public Money & Management, 33(1), 23-30. https://doi.org/10.1080/09540962.2013.744891

Hopkins, J., Pike, L. R., & Littell, D. A. (2016). Gauging America's retirement income planning legacy: A method for determining retirement knowledgeable clients. Journal of Personal Finance, 15(1), 7-26.

Huston, S. J. (2010). Measuring Financial Literacy. The Journal of Consumer Affairs, 44(2), 296-316. DOI: 10.1111/j.1745-6606.2010.01170.x

Johnson, M. A., & Lamdin, D. J. (2015). Gauging the financial capability of Americans. Business Economics, 50(3), 135-146. https://doi.org/10.1057/be.2015.24

Joo, S., & Grable, J. E. (2004). An exploratory framework of the determinants of financial satisfaction. Journal of Family and Economic Issues, 25(1), 25-50. https://doi.org/10.1023/B:JEEI.0000016722.37994.9f

Lin, Q., & Lee, J. (2004). Consumer information search when making investment decisions. Financial Services Review, 13(4), 319-332.

Loibl, C., Cho, S. H., Diekmann, F., & Batte, M. T. (2009). Consumer self-confidence in searching for information. The Journal of Consumer Affairs, 43(1), 26-55. doi:10.1111/j.1745-6606.2008.01126.x

Lusardi, A. (2012). Financial literacy and financial decision-making in older adults. Journal of the American Society on Aging, 36(2), 25-32.

Lusardi, A. (2015a). Financial literacy skills for the 21st century: Evidence from PISA. The Journal of Consumer Affairs, 49(3), 639-659. DOI: 10.1111/joca.12099

Lusardi, A. (2015b). Financial literacy: Do people know the ABCs of finance? Public Understanding of Science, 24(3), 260-271. DOI:10.1177/0963662514564516

Lusardi, A., & Mitchell, O. S. (2007a). Baby boomer retirement security: The roles of planning, financial literacy, and housing wealth. Journal of Monetary Economics, 54(1), 205-224. DOI: 10.3386/w12585

Lusardi, A., & Mitchell, O. S. (2007b). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business Economics, 42(1), 35-44. https://doi.org/10.2145/20070104

Lusardi, A., & Mitchell, O. S. (2008). Planning and financial literacy: How do women fare? American Economic Review, 98(2), 413-417. DOI: 10.3386/w13750

Mezick, E. M. (2002). Investing wisely: Individual investors as information seekers. Journal of Finance and Business Leadership, 7(1), 3-23. https://doi.org/10.1300/J109v07n01_02

Michalos, A. C. (2008). Education, happiness and wellbeing. Social Indicators Research, 87(3), 347-366. https://doi.org/10.1007/s11205-007-9144-0

Miller, G., Kuzner, L. A., & Sharma, M. (2014). Online learning and financial decision making. International Journal of Business Research & Information Technology, 2014(1), 83-91.

Monticone, C. (2010). How much does wealth matter in the acquisition of financial literacy? The Journal of Consumer Affairs, 44(2), 403-422. DOI: 10.1111/j.1745-6606.2010.01175.x

Nilton, P., & Xiao, J. J. (2016). Financial literacy overconfidence and financial advice seeking. Journal of Financial Service Professionals, 70(4), 78-88.

Ntalianas, M., & Wise, V. (2011). The role of financial education in retirement planning. Australasian Accounting Business & Finance Journal, 5(2), 23-37.

Pearson, R. (2010). Statistical Persuasion. Los Angeles: Sage Publications, Inc.

Prensky, M. (2001). Digital natives, digital immigrants: Part 1. On the Horizon, 9(5), 1-6. https://doi.org/10.1108/10748120110424816

Robb, C. A., Babiarz, P., & Woodyard, A. (2012). The demand for financial professionals' advice: The role of financial knowledge, satisfaction, and confidence. Financial Services Review, 21(4), 291-305.

Rubin, A., & Rubin, E. (2010). Informed investors and the Internet. Journal of Business Finance & Accounting, 37(7), 841-865. DOI: 10.1111/j.1468-5957.2010.02187.x

Rustomfram, P., & Robinson, B. (2015). Online government resources for financial literacy. Journal of Business & Finance Librarianship, 20(1/2), 95-115. https://doi.org/10.1080/08963568.2015.977083

Sherraden, M. S., & Grinstein-Weiss, M. (2015). Creating financial capability in the next generation: An introduction to the special issue. The Journal of Consumer Affairs, 49(1), 1-12. DOI: 10.1111/joca.12067

Stankovska, A., & Popovski, N. (2012). The role of media in promotions of financial products and services as a tool for enhancing public confidence. International Scientific Conference: The role of the media in the promotion of products and services (pp. 287- 298). Republic of Macedonia: Macedonian Marketing Association and European University.

U.S. Department of Health and Human Services. (2017, January). U.S. Federal poverty guidelines used to determine financial eligibility for certain Federal programs. Retrieved from https://aspe.hhs.gov/poverty-guidelines

Van Rooij, M., Lusardi, A., & Alessie, R. (2012). Financial literacy, retirement planning and household wealth. The Economic Journal, 122(560), 449-478. DOI: 10.1111/j.1468-0297.2012.02501.x

Way, W. L. (2014). Contextual influences on financial behavior: A proposed model for adult financial literacy education. New Directions for Adult and Continuing Education, 2014(141), 25-35. DOI: 10.1002/ace.20082

Xiao, J. J., Chen, C., & Chen, F. (2014). Consumer financial capability and financial satisfaction. Social Indicators Research, 118(1), 415-432. https://doi.org/10.1007/s11205-013-0414-8

Xiao, J. J., Chen, C., & Sun, L. (2015). Age differences in consumer financial capability. International Journal of Consumer Studies, 39(4), 387-395. DOI: 10.1111/ijcs.12205