Written By: Lu Fan and HanNa Lim
This study used the 2017 National Financial Well-Being Survey to investigate the relationship between cognitive ability and seeking financial advice. Three aspects of cognitive ability were examined: memory, objective numeracy, and subjective numeracy. The results showed that in general, the three were not associated with seeking financial advice. However, after decomposing the sources of the advice, we found that among financial advice-seekers, memory and objective numeracy were positively associated with seeking financial advice from family. When adding the interactions between cognitive ability factors and age, older individuals with good memories were less likely to seek advice from family, while older individuals with higher objective numeracy were less likely to use social networks to seek financial advice. The study’s findings suggest future development in policies and practices to benefit those with low cognitive abilities to seek better financial advice using multiple advice sources.