Financial Communications and Asset Allocation Decisions: The Effects of Reading Style, Financial Knowledge, and Individual Differences
Financial communications can be complex, making misinterpretation likely. This study takes an in-depth look at how people process – and act upon – financial information.
Although financial consultants are available to workers in many large organizations, important retirement plan decisions are often based solely on plan communications and the worker’s individual knowledge. Yet, most people find financial information complex and unfamiliar. This study assesses working adults’ ability to comprehend communications about retirement savings plans, and projects how comprehension levels, along with other factors, affect personal asset mix decisions.
The researchers used eye-tracking technologies and procedures to collect detailed, individual-level data on how working adults process communications about retirement savings plans. As part of the study, they manipulated the medium of communication (print vs. online) and information format (graphical vs. text) to assess how these factors affect reading style, comprehension (i.e., increases in financial knowledge), and personal asset mix decisions.