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<p>Financial literacy of clients is an important consideration for financial planners as it has implications for determining financial capacity. Likewise, overconfidence is also an important concern, given that overconfident clients may indicate they understand advice when in reality they do not. Using an online survey, we gathered data on subjective and objective levels of financial literacy from a sample of university students. We then examined the associations between self-assessed and actual levels of financial literacy with the aim of identifying overconfidence. We find, generally, respondents do not overestimate their financial literacy; however, respondents with English as a second language were significantly more overconfident than other demographic groups. These findings can help planners in identifying clients who may be overconfident in their own financial literacy.</p>
</abstract>

Financial literacy of clients is an important consideration for financial planners as it has implications for determining financial capacity. Likewise, overconfidence is also an important concern, given that overconfident clients may indicate they understand advice when in reality they do not. Using an online survey, we gathered data on subjective and objective levels of financial literacy from a sample of university students. We then examined the associations between self-assessed and actual levels of financial literacy with the aim of identifying overconfidence. We find, generally, respondents do not overestimate their financial literacy; however, respondents with English as a second language were significantly more overconfident than other demographic groups. These findings can help planners in identifying clients who may be overconfident in their own financial literacy.

Overconfidence in Financial Literacy: Implications for Planners

Financial Planning Research Journal

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Overconfidence in Financial Literacy: Implications for Planners"}

Financial literacy of clients is an important consideration for financial planners as it has implications for determining financial capacity. Likewise,...

Overconfidence in Financial Literacy: Implications for Planners

Published Online: Mar 19, 2024

Page range: 31 - 46

Received: May 31, 2017

Accepted: Jul 30, 2017

DOI: https://doi.org/10.2478/fprj-2017-0007

© 2017 Laura de Zwaan et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.