Yahoo! recently highlighted a study commissioned by GuideVine that shows many Americans in their thirties are sorely lacking in knowledge when it comes to basic financial terms.
The majority of people could not appropriately define common financial terms such as:
- Understanding what interest (48 percent) is.
- The concept of bankruptcy (48 percent).
- How inflation works (34 percent).
The most common financial mistake people over the age of 30 admit to making is not saving enough (51 percent).
Other financial mistakes include:
- Not having enough emergency cash (40 percent)
- Accumulating unnecessary debt (37 percent)
- Saving too late (28 percent).
The majority of respondents had never sought financial advice before (64 percent), which may be because only 49 percent of people believe that financial advisers are trustworthy.
According to Sharma, part of distrust stems from the lack of transparency because “making sense of all the different financial professionals is very confusing; there are literally hundreds of thousands of representatives in the industry. We make it easy by explaining the differences and only including advisors that go through a rigorous due diligence process to be included on our site. That way, people can be comfortable knowing that the advisor they get matched with is working in their best interest and not motivated by hidden fees and big commissions.”
One bright spot in the study shows younger Americans aged 30-36 are the most likely to get financial advice (50 percent) and most likely to get financial knowledge and tips from social media sites like Facebook and Twitter (67 percent).
As Americans get older, they are less likely to have confidence in financial advisers – people aged 30-36 agreed much more strongly than advisers can be trusted, compared to those 55+ (35 percent vs. 4 percent).
According to Sharma, “even with everything younger Americans have seen during the Great Recession, they are financially optimistic when it comes to achieving their long term financial goals and are willing to seek help to get there. So far, this help has been informal – family, blogs, etc. – but they do want professional advice and are more likely to trust an advisor, by a 4-1 margin, than other generations”
71% of respondents aged 30 to 45 are likely to research online before meeting a financial professional, and 46% of this age group would be more likely to meet the advisor if they watched a short intro video about the advisor
According to Sharma, “trust is something that takes time to build, and for many people seeking financial advice, it is often difficult to find the right person. Our videos have been an incredibly popular way for people to become comfortable with a financial advisor, before actually contacting them.”
To learn more about how GuideVine makes the search for a financial advisor, easier, smarter and more personal visit GuideVine.com.