The 2020 TIAA Institute-GFLEC Personal Finance Index: Financial Literacy and Advice

Receiving professional financial advice should also improve an individual’s financial wellness. Access to financial advice may occur at work through a financial wellness program or a retirement savings plan or, alternatively, an individual may seek out an advisor outside the context of work.

We find that individuals with greater financial literacy are more likely to receive financial guidance from a professional advisor or advisory service (Figure 18).21 This positive correlation between financial literacy and the use of financial advice indicates a complementary relationship, as opposed to one serving as a substitute for the other.22 This makes sense in that financial decisions are ultimately up to the individual, and greater financial literacy positions an individual to be proactive in any advice session.

Figure 18
Source: TIAA Institute-GFLEC Personal Finance Index (2020).

21 An analogous result was found in the 2019 P-Fin Index.
22 This is consistent with previous research that identified a complementary relationship. See Collins (2012).

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