How Financial Literacy Shapes the Demand for Financial Advice at Older Ages

Wharton Pension Research Council Working Paper No. 2020-02

Journal of the Economics of Ageing, Forthcoming

38 Pages Posted: 22 Apr 2019 Last revised: 7 Jun 2021

See all articles by Hugh Hoikwang Kim

Hugh Hoikwang Kim

University of South Carolina, Darla Moore School of Business

Raimond Maurer

Goethe University Frankfurt - Finance Department

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

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Date Written: March 30, 2019

Abstract

We investigate how financial literacy shapes older Americans’ demand for financial advice. Using an experimental module fielded in the Health and Retirement Study, we show that financial literacy strongly improves the quality but not the quantity of financial advice sought. In particular, more financially literate people seek financial help from professionals. This effect is more pronounced among older people and those with more wealth and more complex financial positions. Our analysis result implies that financial literacy and financial advisory services are complementary with, rather than substitutes for, each other.

Keywords: financial advice, financial literacy, aging, money management, Health and Retirement Study

JEL Classification: D14, G11, G41, J26

Suggested Citation

Kim, Hugh Hoikwang and Maurer, Raimond and Mitchell, Olivia S., How Financial Literacy Shapes the Demand for Financial Advice at Older Ages (March 30, 2019). Wharton Pension Research Council Working Paper No. 2020-02, Journal of the Economics of Ageing, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3363383 or http://dx.doi.org/10.2139/ssrn.3363383

Hugh Hoikwang Kim (Contact Author)

University of South Carolina, Darla Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States

Raimond Maurer

Goethe University Frankfurt - Finance Department ( email )

Grüneburgplatz 1
House of Finance
Frankfurt, 60323
Germany

Olivia S. Mitchell

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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