Wealthy Put Great Stock in Financial Literacy
Financial knowledge; Who has it, who wants it, and what can the financial services industry do to help their clients make the grade?
Financial Literacy; Do the Rich Know Something We Don’t, a new Spectrem Group white paper, examines the attitudes of Affluent households about how they perceive their financial knowledge. How do they rate themselves? How important is financial knowledge to them? Who and what are they consulting to gain this knowledge?
To download this free Spectrem Group White Paper, click here.
Financial literacy is the foundation on which individuals build toward a financially secure future.
The 2008 economic collapse was a wake-up call for millions of Americans to become more engaged with their personal finances. Spectrem Group research consistently finds that among Affluent households, the biggest financial fear is running out of money in retirement, while the biggest financial regret is not saving enough toward their retirement.
Wealthier households tend to put greater stock in being financially literate concerning financial products and investments. When asked by Spectrem Group how important their financial knowledge is to them, half of Millionaires surveyed responded that it was “extremely important,” compared with just 27 percent of households with a net worth of less than $100,000.
Wealth level studies conducted by Spectrem Group find that with greater wealth comes a greater estimation for one’s financial knowledge. Among non-Millionaire Mass Affluent investors with a net worth of at least $100,000 (not including primary residence), 72 percent consider smart investing to be the primary factor in their wealth creation. In comparison, 83 percent of Millionaire households cite smart investing as the driver of their financial success. This percentage is even higher (90 percent) among Ultra High Net Worth households with a net worth between $5 million and $25 million.
As wealth increases, Affluent investors look toward their financial advisors to boost their financial literacy. A gain in financial knowledge as the primary benefit of working with a financial advisor, Financial Literacy; Do the Rich Know Something We Don’t reports.
As wealth increases, so do these elite investors place more importance on their advisor’s advice and less on financial information obtained through family or friends or their own independent research. Ultra High Net Worth investors with a net worth between $5 million and $25 million rank the helpfulness of their financial advisor in making financial decisions 70 on a scale of 0 to 100. In comparison, non-Millionaires rank their financial advisor’s helpfulness a 63 (their spouse ranks at 68!)