Overconfidence in financial literacy: implications for planners

Article

de Zwaan, Laura, Lee, Chrisann, Liu, Yulin and Chardon, Toni. 2017. "Overconfidence in financial literacy: implications for planners." Financial Planning Research Journal. 3 (2), pp. 31-46.
Article Title

Overconfidence in financial literacy: implications for planners

ERA Journal ID212509
Article CategoryArticle
Authorsde Zwaan, Laura (Author), Lee, Chrisann (Author), Liu, Yulin (Author) and Chardon, Toni (Author)
Journal TitleFinancial Planning Research Journal
Journal Citation3 (2), pp. 31-46
Number of Pages16
Year2017
PublisherGriffith University
Place of PublicationBrisbane
ISSN2206-1347
2206-1355
Web Address (URL)https://www.griffith.edu.au/business-government/griffith-business-school/departments/department-accounting-finance-economics/research/financial-planning-research-journal/current-edition
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.

Keywordsfinancial literacy, overconfidence, seemingly unrelated regression, measuring agreement, online questionnaire survey
ANZSRC Field of Research 2020350202. Finance
480106. Taxation law
Public Notes

© 2017 Financial Planning Research Journal.

Byline AffiliationsQueensland University of Technology
School of Law and Justice
Institution of OriginUniversity of Southern Queensland
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