Who seeks financial advice?

Maher H. Alyousifa,*, Charlene M. Kalenkoskib

aTexas Tech University, 5301 Chicago Avenue Apt 6103, Lubbock, TX 79414, USA
bProgram, Texas Tech University, 1301 Akron Avenue, Lubbock, Box 41210, Lubbock, TX 79409-1210, USA

Abstract

The determinants of seeking five types of financial advice are examined and are found to be
consistent across the different types of advice. In addition, no significant differences are found among
subsamples defined by gender, age, and financial literacy. Income and risk tolerance are related
positively to the demand for financial advice and more greatly affect the probability of seeking advice
than do other variables. A low perception of financial knowledge, which can be a proxy for
self-confidence, and financial fragility decrease the probability of seeking financial advice. © 2017
Academy of Financial Services. All rights reserved.

JEL classification: D14; G20

Keywords: Financial advice; Risk tolerance; Financial knowledge; Financial literacy; Financial fragility

1. Introduction

The demand for professional financial advice by the U.S. population is estimated to be
within the range of 25–33% (Collins, 2012) despite the fact that many American households
are experiencing financial difficulty (Brooks, Wiedrich, Sims, and Rice, 2015). According to
a liquid asset poverty measure by Assets and Opportunities Scorecard,1 for example, 44% of
U.S. households have less than three months of savings. Moreover, 55% of consumers have
credit scores that make reasonably priced loans unattainable (Brooks et al., 2015), and only
22% of workers are very confident about having enough money to live comfortably during
retirement (VanDerhei and Copeland, 2015). Understanding the correlates of financial-

* Corresponding author. Tel.: �966-55-622-6786; fax: �966-13-664-0602.
E-mail address: maheryousif@hotmail.com (M.H. Alyousif)

Financial Services Review 26 (2017) 405–432

1057-0810/17/$ – see front matter © 2017 Academy of Financial Services. All rights reserved.



advice-seeking behavior helps to explain the coexistence of reported low financial satisfac-
tion and measured low demand for financial advice among American households.

Investors who rely on their own understanding often make poor financial decisions
because of a lack of knowledge, information costs, and behavioral biases (Fischer and
Gerhardt, 2007). These challenges warrant the use of professional advisers, who serve
different purposes, deal with various products, and can help their clients navigate the high
degree of financial uncertainty.

Using the 2012 National Financial Capability Study (NFCS), a cross-sectional study that
was funded by the Financial Industry Regulatory Authority’s (FINRA) Investor Education
Foundation, this article investigates the characteristics of financial-advice-seeking behavior
for five types of financial advice: debt counseling, savings/investment, mortgages/loans,
insurance, and tax planning. A probit regression model is estimated to examine the associ-
ations between income, risk tolerance, financial knowledge, financial literacy, financial
fragility, and a set of demographic variables and the probability of seeking financial advice.
Additionally, this article examines the determinants of financial-advice-seeking behavior for
subsamples defined by gender, age, and financial literacy.

2. Literature review

The existing literature on the characteristics of financial-advice-seeking behavior exam-
ines this conduct generally and for specific types of advice such as debt counseling,
retirement planning, and investment management (Collins, 2012; Finke, Huston, and Win-
chester, 2011; Grable and Joo, 1999; Hackethal, Haliassos, and Jappelli, 2012; Heo, Grable,
and Chatterjee, 2013; Inderst and Ottaviani, 2012; Kramer, 2012; Robb, Babiarz, and
Woodyard, 2012; Heo, Grable, & Chatterjee, 2013; Salter, Harness, and Chatterjee, 2010;
Scott and Finke, 2013; Seay, Kim, and Heckman, 2016; Simms, 2014). These studies identify
age, gender, wealth, income, home ownership, education, financial knowledge, confidence,
risk tolerance, and negative life events as factors that influence the demand for financial
advice.

Age is a significant determinant of seeking advice in all areas of personal finance, has been
found to be related positively to debt counseling for those aged 25–54, and is related
negatively to debt counseling for respondents who are aged 65 or older (Robb et al., 2012).
Grable and Joo (1999) find that younger households and those who do not own homes are
more likely to seek financial help compared with homeowners and older individuals who
may experience self-concealment2 to protect their perceived life achievement. In addition,
individuals who demonstrate bad financial behaviors (e.g., overspending, overusing credit,
and not saving for retirement) and who experience financial stressors (e.g., death of a family
member, divorce, and loss of a job) are more likely to seek financial help. However,
Hackethal et al. (2012) find that older clients (over 50) are more likely to use a financial
adviser compared with younger clients aged 18–30.

Gender influences the decision to seek financial advice. Because of their overconfidence
in managing finances, males resist financial counseling and are less likely to seek financial
advice compared to females (Finke et al., 2011; Hackethal et al., 2012; Robb et al., 2012).

406 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



In contrast, Tang and Lachance (2012) find that gender and home ownership do not affect the
demand for financial advice.

Income has been found to be related positively to the demand for financial advice (Robb
et al., 2012). However, other studies indicate that wealth has more of an impact on the
decision to seek financial advice compared to income (Finke et al., 2011; Hackethal et al.,
2012; Hanna, 2011). Advisers are inclined to provide their services to clients who are
self-employed, female, have high wealth, and have more work experience (Hackethal et al.,
2012). On the other hand, Calcagno and Monticone (2014) do not find support for the
predicted associations between high wealth or high income and the probability of seeking
financial advice.

Although education increases the likelihood of seeking financial advice (Finke et al.,
2011; Hanna, 2011; Inderst and Ottaviani, 2012), perceived knowledge about managing
finances reduces the likelihood of asking for help (Finke et al., 2011). However, other studies
find that knowledge and confidence are correlated positively with the use of financial advice
(Calcagno and Monticone, 2014; Collins, 2012; Inderst and Ottaviani, 2012; Robb et al., 2012).

The literature also investigates the determinants of advice-seeking behavior from other
angles. Studies about the sources of advice examine an individual’s tendency to seek
financial advice from nonprofessional versus professional sources (Grable and Joo, 2001),
bank-affiliated versus independent advisers (Hackethal et al., 2012), social networks versus
paid advisers (Chang, 2005; Loibla and Hira, 2006), and the use of financial planners (Hanna,
2011; Letkiewicz, Robinson, and Domian, 2016). Studies that examine advice seeking by certain
groups focus on less-sophisticated or low-income clients (Kramer, 2012; Tang and Lachance,
2012), older adults (Cummings and James, 2014), affluent retirees (Salter et al., 2010), and the
middle class (Winchester and Huston, 2015). They also examine the effects of financial literacy
on the use of financial advice (Calcagno and Monticone, 2014; Collins, 2012; Robb et al., 2012;
Seay et al., 2016) and the determinants of seeking comprehensive versus partial financial advice
(Elmerick, Montalto, and Fox, 2002; Finke et al., 2011; Tang and Lachance, 2012).

Financial risk tolerance and financial satisfaction have been found to play a role in
determining whether people seek financial help from professionals or nonprofessionals such
as family members, friends, or work colleagues (Grable and Joo, 2001; Lin and Lee, 2004).
Chang (2005) finds that low socioeconomic status affects people’s decisions to seek infor-
mation about investment and savings from their social network rather than from paid
financial advisers.

Elmerick et al. (2002) find that the determinants of seeking comprehensive financial
advice and seeking advice regarding savings and investment are different from the determi-
nants of seeking advice regarding debt and borrowing. Education, income, net worth, and
financial assets are related positively to the probability of seeking comprehensive financial
advice, while age is related negatively to the use of comprehensive financial planners. Hanna
(2011) studies the demand for personal financial planners and finds that age increases the
likelihood of using a planner until the age of 42 then decreases it. The determinants that
increase the likelihood of using a financial planner include education, risk tolerance, being
a single-female-headed household, and being black (Hanna, 2011).

Cummings and James (2014) examine the factors that influence the decision to begin or
discontinue the use of financial advisers among older adults and find that becoming wid-

407M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



owed, receiving family help, and experiencing an increase in income or net worth are
significant factors in influencing the demand for financial advisers. Studying the sentiment of
financial-advice-seeking behavior among the middle class, Winchester and Huston (2015)
find that the expected benefit relative to income is a more significant determinant of seeking
financial advice than individuals’ attitudes regarding cost.

Financial literacy increases the probability of seeking financial advice (Calcagno and
Monticone, 2014), and such advice is a complement to rather than a substitute for financial
capability (Collins, 2012). As income, education, and financial knowledge increase, the
likelihood of seeking financial advice increases; however, self-assessment of financial
literacy is related negatively to seeking financial advice, while measured financial literacy
has no effect on the demand for such advice (Kramer, 2016).

This article contributes to the literature that examines the determinants of seeking pro-
fessional financial guidance by focusing on five specific types of financial advice and
investigating three subsamples that are defined by gender, age, and financial literacy.
Because each type of financial advice has a specific purpose, studying the determinants of
seeking advice about debt, savings/investment, mortgages/loans, insurance, and tax planning
provides valuable insights into advice-seeking behavior. In addition to financial knowledge
and risk attitudes that Robb et al. (2012) examine in their study, this article constructs two
variables, financial fragility and financial literacy, to comprehend the effect of financial
difficulty and the grasp of basic financial concepts on seeking financial advice.

The focus on females, the young, and the financially illiterate is related to specific
characteristics, examined in the empirical literature, that distinguish and influence the
financial behavior of these subsamples. Females and young respondents are most likely to
experience financial stress and difficulties (ORC, 2015; Simms, 2014), and the financially
illiterate are susceptible to suboptimal financial decisions (Lusardi, 2008; Lusardi and
Mitchell, 2009; Lusardi and Tufano, 2009; van Rooij, Lusardi, and Alessie, 2011).

The empirical literature about gender differences in financial knowledge finds that females
score lower than males in financial literacy tests, are more likely to be dissatisfied with their
personal financial situation, and are less confident in their financial skills and their ability to
manage financial emergencies (Goldsmith and Goldsmith, 2006; Hira and Mugenda, 2000;
Hung, Yoong, and Brown, 2012). Gender differences in investment knowledge, financial
skills, and risk tolerance between females and males might explain and exacerbate the
economic status disadvantage of females that manifests in lower lifetime earnings, lower
wealth, and lower retirement-plan participation (Bajtelsmit and Bernasek, 1996; Hung et al.,
2012). While females are more patient than males in the measurement of rate of time
preference, they exhibit more risk aversion and less interest in financial subjects (Donkers
and van Soest, 1999). The gender role differences and division of labor within households
provide another explanation for the disparity in the consumption of financial services
(Burton, 1995; Morris and Meyer, 1993).

The literature on financial competency among young adults shows weak financial literacy
and a lack of understanding of basic financial knowledge, which affect the quality of their
financial decisions and lead them to commit costly financial mistakes (Lusardi, 2008; Lusardi
and Mitchell, 2014; Lusardi, Mitchell, and Curto, 2010). A high level of debt at an early age,
for example, impedes the accumulation of wealth and forestalls their contributions to employer-

408 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



provided retirement plans (Lusardi et al., 2010). Additionally, weak financial numeracy has
negative impacts on critical decisions related to financing an education and making major
purchases such as buying a car (Lusardi, 2012). Laibson, Gabaix, Driscoll, and Agarwal (2007)
find that financial sophistication has a hump-shaped pattern, which could explain the high
borrowing costs in terms of interest rates and fees by younger and older adults.

Research indicates that financial literacy influences financial-decision making and that the
understanding of basic financial concepts is associated with retirement planning, stock
market participation, and individuals’ borrowing behavior (Hastings and Mitchell, 2011;
Lusardi, 2008; Lusardi and Mitchell, 2009; van Rooij et al., 2011). Individuals who are not
financially sophisticated are less likely to own stocks because they do not comprehend the
working of financial markets and asset pricing and are more likely to seek financial advice
from friends and family members than from financial professionals (van Rooij et al., 2011).

3. Data

The dependent variables in the analysis in this article are indicators for whether or not five
different types of financial advice were sought, debt counseling, savings/investment, taking
out a mortgage/loan, insurance of any type, and tax planning. Each variable takes a value of
1 if the specific type of advice was sought from a financial professional and 0 if it was not.

The independent variables are gender, age, race, education, marital status, number of
children, income, risk tolerance, perceived financial knowledge, financial literacy, and
financial fragility. Because the three subsamples are defined by age, gender, and financial
literacy, those variables are excluded from their regressions.

Female is a dichotomous variable that takes a value of 1 if the respondent is female and
0 if the respondent is male. Age is categorized into six ranges: 18–24, 25–34, 35–44, 45–54,
55–64, and 65 or more. A categorized dichotomous variable for each age range is defined
(the omitted category is 65�). Race is a dichotomous variable that takes a value of 1 if
the respondent is white and 0 if the respondent is nonwhite.3 Education is categorized
into three levels: high school or less, some college, and college or more (the omitted
category is college or more). Marital status is categorized as married, living with a
partner, and single (the omitted category is married).

The number of financially dependent children is categorized into five choices: not having
any children, having one child, having two children, having three children, and having four
children or more. The omitted category is not having any children. Income is categorized into
eight ranges, and for each range a dichotomous variable is defined. The comparison group
is less than $15,000. The risk tolerance variable is a subjective answer by respondents to the
following question: “When thinking of your financial investment, how willing are you to take
risk?” The answers fall on a 10-point scale that ranges from 1 (not at all willing) to 10 (very
willing). In this analysis, they are aggregated into three risk tolerance levels4 and the omitted
category is low risk tolerance. The financial knowledge variable is a subjective assessment
by respondents to the following question: “How would you assess your overall financial
knowledge?” The answers fall on a seven-point scale that ranges from 1 (very low) to 7 (very

409M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



high). In this analysis, they are aggregated into three perceived financial knowledge levels5

and the omitted category is high financial knowledge.
Financial fragility is constructed from seven questions that examine respondents’ ten-

dency to experience overspending, difficulty in covering expenses, the lack of an emergency
fund, inability to come up with $2000 in the next month, the absence of a retirement plan,
and incurring too much debt. This variable is a sum of these signs of financial fragility.
Overspending is a dichotomous variable that takes a value of 1 if the respondent’s spending
is more than income and 0 otherwise. The difficulty of covering expenses and paying all bills
is a dichotomous variable that takes a value of 1 if the respondent indicated it was very
difficult or somewhat difficult to cover expenses and 0 otherwise. Having no emergency fund
that would cover three months of expenses is a dichotomous variable that takes a value of
1 if the respondent answered “no” and 0 otherwise. The confidence to come-up with $2000
is a dichotomous variable that takes a value of 1 if the respondent could probably not or is
certain she/he could not come-up with that amount and 0 otherwise. Having no retirement
plan is a dichotomous variable that takes a value of 1 if the respondent has neither a private
plan nor a plan through a current or a previous employer and 0 otherwise. Having too much
debt is a dichotomous variable that has a value of 1 if the respondent agrees or strongly
agrees with that statement and 0 otherwise.

Financial literacy consists of five questions that measure respondents’ understanding of
compound interest, inflation, bond prices, mortgage interest, and risk. This variable is a sum
of the correct answers to these questions and has a range of 0–5. Table 1 provides the
distribution of correct financial literacy answers and shows that respondents who answered
4–5 questions correctly are between 16 and 26%. Fig. 1 shows that respondents have
difficulty understanding the effect of interest rates on bond prices and the risk-return
trade-off in buying a single company’s stock versus purchasing a share of a mutual fund.

4. Model

The model estimated in this article is a probit model:

Yij
* � B0 � Xi

�B � �ij (1)

Yij � � 1 if Yij
* � 0

0 if Yij
* � 0

where Yij
* is a latent variable representing the net benefit an individual i perceives he or she

will receive from seeking financial advice related to task j where j is one of the following: debt
counseling, savings/investment, a mortgage/a loan, insurance, and tax planning,6 Yij is equal to 1
if the respondent reported seeking that type of financial advice and 0 otherwise; Xi is a matrix of
explanatory variables representing income,7 risk tolerance, perceived financial knowledge, finan-
cial literacy, financial fragility, female, white, age, education, marital status, and number of
children; and uij is an error term that follows the standard normal distribution.

410 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



Table 1 Summary statistics

Mean Standard error

Dependent variables
Debt counseling 0.0906 0.0022
Savings or investment advice 0.2871 0.0033
Mortgage or loan advice 0.2020 0.0030
Insurance advice 0.3028 0.0034
Tax planning 0.1812 0.0029

Independent variables
Gender

Male 0.4858 0.0037
Female 0.5142 0.0037

Age (years)
18–24 0.1231 0.0027
25–34 0.1830 0.0030
35–44 0.1635 0.0027
45–54 0.1962 0.0029
55–64 0.1791 0.0028
65� 0.1551 0.0026

Race
White 0.6647 0.0037
Non-White 0.3353 0.0037

Education level
High school or less 0.3812 0.0037
Some college 0.3591 0.0036
College or more 0.2597 0.0030

Marital status
Married 0.5403 0.0037
Living with a partner 0.0816 0.0021
Single 0.3782 0.0037

Number of children
No children 0.3181 0.0035
One child 0.1699 0.0028
Two children 0.1312 0.0025
Three children 0.0567 0.0018
Four children or more 0.0337 0.0014
No financial dependent children 0.2905 0.0033

Annual income
Less than $15,000 0.1426 0.0027
$15,000 to less than $25,000 0.1225 0.0025
$25,000 to less than $35,000 0.1155 0.0024
$35,000 to less than $50,000 0.1470 0.0026
$50,000 to less than $75,000 0.1882 0.0029
$75,000 to less than $100,000 0.1153 0.0023
$100,000 to less than $150,000 0.1076 0.0023
$150,000 or more 0.0613 0.0017

Risk-tolerance level
Low 0.3517 0.0035
Medium 0.4388 0.0037
High 0.1746 0.0029

(continued on next page)

411M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



5. Hypotheses

H1: Income is expected to be related positively to seeking financial advice about savings/
investment, mortgages/loans, insurance, and tax planning, and to relate negatively
with debt counseling for the entire sample and subsamples. Previous literature finds
a positive relation between income and the demand for financial advice.

H2: Risk tolerance is expected to be related positively to seeking financial advice for the
entire sample and subsamples. Research indicates that this factor has been found to
increase the likelihood to seek financial help from professionals.

H3: Perceived financial knowledge is expected to be related negatively to seeking
financial advice for the entire sample and subsamples. Although some studies find
that perceived knowledge reduces the likelihood of asking for advice, others report
a positive relation between knowledge and the use of financial advice.

H4: Financial literacy is expected to be related positively to seeking all types of financial
advice except debt counseling for the entire sample and subsamples. The literature
finds that financial literacy increases the probability of seeking advice. However,
some studies differentiate between the effect of subjective and objective assessment
of financial literacy on the demand for financial advice.

H5: Financial fragility is expected to be related positively to seeking financial advice for
the entire sample and subsamples. Although respondents who experience financial
stressors are more likely to seek advice, those who are financially fragile might not
afford the purchase of financial advice.

Table 1 (Continued)

Mean Standard error

Perceived financial knowledge
Low 0.0915 0.0022
Medium 0.1487 0.0027
High 0.7288 0.0034
Financial literacy 2.8781 0.0110
Financial fragility 2.3821 0.0133

Number of observations 25,509

0% 

5% 

10% 

15% 

20% 

25% 

30% 

35% 

Debt 
counseling   

Savings or 
investment   

Mortgage or 
loan  

Insurance  Tax planning   

Pe
rc

en
ta

ge
 o

f A
dv

ic
e 

U
se

rs
 

 

Type of Financial Advice 

Fig. 1. Demand for financial advice. Source: Author’s tabulation of data from the 2012 FINRA National Financial
Capability Study.

412 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



6. Descriptive statistics

The summary statistics of the dependent and independent variables are provided in Table 1.
The first important observation to be made is the low demand for financial advice, which is
utilized by 9–30% of the population, depending on the type of advice. Sixty-six percent of
respondents are White and 34% are non-White respondents. Seventy-four percent of respondents
have some college education or less. Married individuals are the majority at 54%, followed by
singles at 38%, and individuals who are living with partners at 8%. Thirty-two percent of
respondents have no children and 29% have children who are financially independent.

Proportions are distributed evenly among the income categories, except for the $50,000 to
$75,000, which represents 19% of the population, and those making $150,000 or more,
which represents 6% of the population. Only 17% of respondents have a high-risk-tolerance
level, while the majority of respondents (44%) have a medium-risk-tolerance level.8

Each type of financial advice serves a specific purpose, which explains the advice use
distribution in Fig. 1 and shows that the two most sought after types of financial advice are
insurance and savings/investment. Even though 86% of respondents to a CFP stress aware-
ness survey point to debt and daily expenses as the two primary sources of stress (ORC,
2015), debt counseling is the least demanded type of advice at 9%.

Although 73% of respondents rated themselves high when asked to give a subjective
assessment of their overall financial knowledge,9 average financial literacy on a scale of 0–5
is only 2.9. Financial fragility is measured on a scale of 0–6, and each number represents the
cumulative signs of financial difficulty across the seven financial fragility questions. Table 2
reveals that only a quarter of respondents do not experience any of the six signs of financial
fragility. Fig. 2 shows that 56% of respondents report difficulty in covering expenses and
paying bills and that 55% have no emergency fund that could cover expenses for 3 months.

The comparison between females and males is provided in Table 3. The t test results
indicate that the significant difference between females and males is related to seeking
financial advice about savings/investment, mortgages/loans, and tax planning. As for debt
counseling, and insurance, there is no evidence of a statistically significant difference.

The comparison between the young (18–44) and the old (45�) is provided in Table 4. The
t test results indicate that the significant difference between the young (18–44) and the old

Table 2 Distribution of financial fragility measure

Fragility degree level Percentage of respondents

0 23.56%
1 15.88%
2 14.59%
3 14.98%
4 16.63%
5 11.14%
6 3.21%

The financial fragility measure consists of seven questions in the 2012 NFCS, which examine a respondent’s
tendency to experience overspending, difficulty in covering expenses, lack of an emergency fund, inability to
raise $2,000 in the next month, lack of any retirement plan, and having a high level of debt. The Table shows the
percentage of respondents who experience different degrees of financial fragility.

413M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



(45�) is related to seeking financial advice about debt counseling, savings/investment, and
mortgages/loans. As for insurance and tax planning, there is no evidence of a statistically
significant difference.

The comparison between the financially illiterate and financially literate respondents is
provided in Table 5. Financial illiteracy is defined as answering two questions or less

0% 
10% 
20% 
30% 
40% 
50% 
60% 

Pe
rc

en
ta

ge
 o

f R
es

po
nd

en
ts

 

Fig. 2. Distribution of financial fragility issues. Source: Author’s tabulation of data from the 2012 FINRA
National Financial Capability Study.

Table 3 Summary statistics (females vs. males)

Female Male

Mean Standard error Mean Standard error

Dependent variables
Debt counseling 0.0878 0.0028 0.0935 0.0034
Savings or investment advice 0.2718 0.0043 0.3033 0.0051 ***
Mortgage or loan advice 0.1872 0.0037 0.2177 0.0046 ***
Insurance advice 0.3019 0.0045 0.3037 0.0051
Tax planning 0.1660 0.0036 0.1973 0.0045 ***

Independent variables
Annual income

Less than $15,000 0.1517 0.0036 0.1329 0.0040 ***
$15,000 to less than $25,000 0.1385 0.0035 0.1055 0.0035 ***
$25,000 to less than $35,000 0.1267 0.0033 0.1037 0.0035 ***
$35,000 to less than $50,000 0.1490 0.0036 0.1449 0.0039
$50,000 to less than $75,000 0.1774 0.0037 0.1997 0.0045 ***
$75,000 to less than $100,000 0.1031 0.0029 0.1281 0.0037 ***
$100,000 to less than $150,000 0.0950 0.0029 0.1209 0.0035 ***
$150,000 or more 0.0586 0.0023 0.0642 0.0026

Risk-tolerance level
Low 0.4286 0.0049 0.2703 0.0049 ***
Medium 0.4169 0.0049 0.4620 0.0056 ***
High 0.1130 0.0032 0.2397 0.0049 ***

Perceived financial knowledge
Low 0.1055 0.0031 0.0768 0.0031 ***
Medium 0.1647 0.0037 0.1317 0.0039 ***
High 0.6930 0.0046 0.7668 0.0049 ***

Financial literacy 2.6110 0.0141 3.1609 0.0166 ***
Financial fragility 2.5171 0.0180 2.2391 0.0195 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

414 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



correctly out of the five financial literacy questions in the survey. The t test results indicate
that the significant difference between the two groups is related to seeking all types of
financial advice.

7. Results

Table 6 reports the estimation results for five probit regression models on the entire
sample. The dependent variables are indicators for whether or not five different types of
financial advice were sought, debt counseling, savings/investment, taking out a mortgage/
loan, insurance of any type, and tax planning. To examine how advice seeking varies by
gender, age, and financial illiteracy, three dummy variables representing those subsamples
are included in the model.

The results of the probit regression models on the entire sample show consistently that
income and risk tolerance are related positively to seeking all types of financial advice. These
results confirm that the existing findings in the literature extend to these specific applications.
The two constructed variables, financial literacy and financial fragility, have an opposite

Table 4 Summary statistics (young vs. old)

Young (18–44) Old (45�)

Mean Standard error Mean Standard error

Dependent variables
Debt counseling 0.1160 0.0037 0.0681 0.0025 ***
Savings or investment advice 0.2610 0.0050 0.3103 0.0045 ***
Mortgage or loan advice 0.2272 0.0047 0.1796 0.0037 ***
Insurance advice 0.3060 0.0052 0.2999 0.0044
Tax planning 0.1790 0.0044 0.1831 0.0037

Independent variables
Annual income

Less than $15,000 0.1876 0.0045 0.1027 0.0031 ***
$15,000 to less than $25,000 0.1302 0.0039 0.1157 0.0032 ***
$25,000 to less than $35,000 0.1201 0.0037 0.1115 0.0031 *
$35,000 to less than $50,000 0.1444 0.0040 0.1493 0.0035
$50,000 to less than $75,000 0.1812 0.0044 0.1944 0.0039 **
$75,000 to less than $100,000 0.1100 0.0035 0.1199 0.0031 **
$100,000 to less than $150,000 0.0820 0.0031 0.1303 0.0033 ***
$150,000 or more 0.0444 0.0023 0.0763 0.0025 ***

Risk-tolerance level
Low 0.2784 0.0050 0.4166 0.0049 ***
Medium 0.4508 0.0057 0.4283 0.0048 ***
High 0.2288 0.0049 0.1266 0.0033 ***

Perceived financial knowledge
Low 0.1091 0.0036 0.0760 0.0027 ***
Medium 0.1727 0.0043 0.1274 0.0033 ***
High 0.6832 0.0053 0.7693 0.0042 ***

Financial literacy 2.5062 0.0164 3.2074 0.0140 ***
Financial fragility 2.7394 0.0190 2.0657 0.0180 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

415M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



effect on seeking financial advice. While financial literacy is related positively to the demand
for all types of financial advice, except for debt counseling, financial fragility decreases the
demand for advice about savings/investment, insurance, and tax planning, but increases the
demand for debt counseling. Financial literacy alerts people to the value of financial advice
in improving their well-being because they realize the complexity of financial topics and
issues. However, financial literacy might be endogenous to the demand for advice. To test
this potential endogeneity and revers causality, the article instruments for financial literacy
using scores for the quality of public schools for 50 states and the District of Columbia in
2012. The results of a Wald test of exogeneity indicate endogeneity of financial literacy.
Therefore, it cannot be concluded that changes in financial literacy influence the demand for
financial advice. On the other hand, financial difficulties such as overspending, lack of an
emergency fund, and having a high level of debt discourage people from purchasing financial
advice. In addition, a low perception of financial knowledge, which could proxy self-
confidence, has been found to decrease the probability of seeking financial advice. The
correlation between a high perception of financial knowledge and financial literacy is found
to be 0.26, which reflects a weak positive linear relation between these key variables. This
finding reveals a lack of consistency between objective and subjective assessment of
financial knowledge.

Table 5 Summary statistics (financially illiterate vs. financially literate)

Financially illiterate Financially literate

Mean Standard error Mean Standard error

Dependent variables
Debt counseling 0.1078 0.0041 0.0799 0.0026 ***
Savings or investment advice 0.2036 0.0051 0.3387 0.0043 ***
Mortgage or loan advice 0.1523 0.0046 0.2327 0.0039 ***
Insurance advice 0.2459 0.0054 0.3379 0.0043 ***
Tax planning 0.1351 0.0044 0.2097 0.0037 ***

Independent variables
Annual income

Less than $15,000 0.2300 0.0052 0.0886 0.0027 ***
$15,000 to less than $25,000 0.1748 0.0048 0.0901 0.0027 ***
$25,000 to less than $35,000 0.1436 0.0044 0.0982 0.0028 ***
$35,000 to less than $50,000 0.1450 0.0044 0.1482 0.0033
$50,000 to less than $75,000 0.1500 0.0045 0.2118 0.0038 ***
$75,000 to less than $100,000 0.0723 0.0032 0.1418 0.0032 ***
$100,000 to less than $150,000 0.0545 0.0029 0.1405 0.0032 ***
$150,000 or more 0.0298 0.0022 0.0808 0.0024 ***

Risk-tolerance level
Low 0.3931 0.0061 0.3261 0.0043 ***
Medium 0.3700 0.0060 0.4814 0.0046 ***
High 0.1741 0.0049 0.1749 0.0036

Perceived financial knowledge
Low 0.1419 0.0044 0.0604 0.0023 ***
Medium 0.1827 0.0048 0.1276 0.0031 ***
High 0.6118 0.0061 0.8012 0.0037 ***

Financial fragility 2.8809 0.0209 2.0738 0.0166 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

416 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
6

Fi
na

nc
ia

l
ad

vi
ce

pr
ob

it

D
eb

t
co

un
se

lin
g

Sa
vi

ng
s/

in
ve

st
m

en
t

M
or

tg
ag

e/
lo

an
In

su
ra

nc
e

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

In
de

pe
nd

en
t

va
ri

ab
le

s
G

en
de

r
(m

al
e)

Fe
m

al
e

�
0.

00
34

0.
00

44
0.

03
02

0.
00

63
**

*
0.

00
40

0.
00

59
0.

03
65

0.
00

69
**

*
0.

00
60

0.
00

57
R

ac
e

(n
on

-W
hi

te
)

W
hi

te
�

0.
02

05
0.

00
48

**
*

�
0.

00
17

0.
00

73
0.

02
04

0.
00

67
**

*
�

0.
01

00
0.

00
78

�
0.

00
88

0.
00

64
A

ge
(6

5�
)

18
–2

4
0.

02
40

0.
01

04
**

0.
01

55
0.

01
40

0.
13

43
0.

01
41

**
*

0.
04

76
0.

01
58

**
*

0.
03

95
0.

01
28

**
*

25
–3

4
0.

03
98

0.
00

94
**

*
�

0.
04

10
0.

01
22

**
*

0.
15

00
0.

01
17

**
*

0.
03

98
0.

01
36

**
*

0.
01

11
0.

01
09

35
–4

4
0.

01
18

0.
00

88
�

0.
11

15
0.

01
19

**
*

0.
07

92
0.

01
15

**
*

0.
00

86
0.

01
34

�
0.

04
76

0.
01

06
**

*
45

–5
4

0.
00

85
0.

00
83

�
0.

09
97

0.
01

05
**

*
0.

03
94

0.
01

04
**

0.
00

64
0.

01
20

�
0.

04
69

0.
00

95
**

*
55

–6
4

0.
01

80
0.

00
78

**
�

0.
03

91
0.

00
97

**
*

0.
03

06
0.

00
98

**
*

0.
01

44
0.

01
12

�
0.

02
02

0.
00

86
**

E
du

ca
tio

n
le

ve
l

(c
ol

le
ge

or
m

or
e)

H
ig

h
sc

ho
ol

or
le

ss
�

0.
03

28
0.

00
59

**
*

�
0.

09
35

0.
00

84
**

*
�

0.
06

22
0.

00
79

**
*

�
0.

07
05

0.
00

91
**

*
�

0.
06

05
0.

00
76

**
*

So
m

e
co

lle
ge

�
0.

01
58

0.
00

52
**

*
�

0.
04

29
0.

00
75

**
*

�
0.

01
33

0.
00

69
*

�
0.

01
46

0.
00

82
*

�
0.

03
22

0.
00

65
**

*
M

ar
ita

l
st

at
us

(m
ar

ri
ed

)
L

iv
in

g
w

ith
a

pa
rt

ne
r

�
0.

00
43

0.
00

84
0.

00
86

0.
01

24
�

0.
01

01
0.

01
10

�
0.

01
10

0.
01

30
�

0.
01

96
0.

01
11

*
Si

ng
le

0.
00

24
0.

00
55

0.
00

90
0.

00
79

�
0.

04
10

0.
00

75
**

*
�

0.
01

60
0.

00
85

*
�

0.
01

51
0.

00
70

**
N

um
be

r
of

ch
ild

re
n

(n
o

ch
ild

re
n)

O
ne

ch
ild

0.
03

87
0.

00
67

**
*

0.
03

59
0.

00
99

**
*

0.
04

91
0.

00
90

**
*

0.
06

62
0.

01
05

**
*

0.
04

50
0.

00
87

**
*

T
w

o
ch

ild
re

n
0.

04
57

0.
00

73
**

*
0.

03
54

0.
01

10
**

*
0.

05
42

0.
00

98
**

*
0.

07
97

0.
01

17
**

*
0.

04
33

0.
00

96
**

*
T

hr
ee

ch
ild

re
n

0.
04

03
0.

00
94

**
*

0.
01

57
0.

01
51

0.
05

85
0.

01
32

**
*

0.
04

47
0.

01
55

**
*

0.
02

34
0.

01
34

*
Fo

ur
ch

ild
re

n
or

m
or

e
0.

05
46

0.
01

13
**

*
0.

06
56

0.
01

90
**

*
0.

06
97

0.
01

64
**

*
0.

08
80

0.
01

96
**

*
0.

04
51

0.
01

64
**

*
N

o
fin

an
ci

al
ly

de
pe

nd
en

t
ch

ild
re

n
0.

00
53

0.
00

71
0.

01
73

0.
00

91
*

0.
02

09
0.

00
89

**
0.

03
09

0.
01

01
**

*
0.

01
39

0.
00

85
A

nn
ua

l
in

co
m

e
(l

es
s

th
an

$1
5,

00
0)

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
0.

04
54

0.
00

89
**

*
0.

06
08

0.
01

42
**

*
0.

05
66

0.
01

41
**

*
0.

10
21

0.
01

44
**

*
0.

05
16

0.
01

37
**

*
$2

5,
00

0
to

le
ss

th
an

$3
5,

00
0

0.
05

04
0.

00
90

**
*

0.
07

45
0.

01
42

**
*

0.
08

25
0.

01
35

**
*

0.
10

31
0.

01
46

**
*

0.
06

85
0.

01
35

**
*

$3
5,

00
0

to
le

ss
th

an
$5

0,
00

0
0.

05
81

0.
00

86
**

*
0.

08
63

0.
01

35
**

*
0.

08
50

0.
01

30
**

*
0.

11
58

0.
01

40
**

*
0.

08
36

0.
01

27
**

*
$5

0,
00

0
to

le
ss

th
an

$7
5,

00
0

0.
06

16
0.

00
89

**
*

0.
11

63
0.

01
34

**
*

0.
11

51
0.

01
28

**
*

0.
13

11
0.

01
39

**
*

0.
10

68
0.

01
25

**
*

$7
5,

00
0

to
le

ss
th

an
$1

00
,0

00
0.

06
96

0.
01

00
**

*
0.

13
20

0.
01

47
**

*
0.

13
00

0.
01

39
**

*
0.

11
67

0.
01

55
**

*
0.

12
53

0.
01

36
**

*
$1

00
,0

00
to

le
ss

th
an

$1
50

,0
00

0.
06

29
0.

01
12

**
*

0.
15

16
0.

01
52

**
*

0.
14

33
0.

01
46

**
*

0.
13

91
0.

01
63

**
*

0.
14

02
0.

01
40

**
*

$1
50

,0
00

or
m

or
e

0.
05

19
0.

01
27

**
*

0.
17

51
0.

01
73

**
*

0.
16

82
0.

01
61

**
*

0.
15

75
0.

01
85

**
*

0.
18

66
0.

01
53

**
*

(c
on

ti
nu

ed
on

ne
xt

pa
ge

)

417M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
6

(C
on

tin
ue

d)

D
eb

t
co

un
se

lin
g

Sa
vi

ng
s/

in
ve

st
m

en
t

M
or

tg
ag

e/
lo

an
In

su
ra

nc
e

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

R
is

k-
to

le
ra

nc
e

le
ve

l
(l

ow
)

M
ed

iu
m

0.
00

92
0.

00
50

*
0.

11
11

0.
00

70
**

*
0.

03
95

0.
00

66
**

*
0.

07
38

0.
00

76
**

*
0.

05
55

0.
00

64
**

*
H

ig
h

0.
04

99
0.

00
62

**
*

0.
16

85
0.

00
93

**
*

0.
06

55
0.

00
87

**
*

0.
11

87
0.

01
02

**
*

0.
10

46
0.

00
82

**
*

Pe
rc

ei
ve

d
fin

an
ci

al
kn

ow
le

dg
e

(h
ig

h)
L

ow
�

0.
00

89
0.

00
73

�
0.

03
42

0.
01

33
**

*
�

0.
05

16
0.

01
18

**
*

�
0.

05
15

0.
01

31
**

*
�

0.
03

67
0.

01
22

**
*

M
ed

iu
m

�
0.

01
60

0.
00

62
**

*
�

0.
01

90
0.

00
95

**
�

0.
01

39
0.

00
86

�
0.

03
36

0.
00

99
**

*
�

0.
01

63
0.

00
85

*
Fi

na
nc

ia
l

lit
er

ac
y

�
0.

00
34

0.
00

16
**

0.
02

23
0.

00
24

**
*

0.
01

68
0.

00
22

**
*

0.
02

12
0.

00
26

**
*

0.
01

17
0.

00
21

**
*

Fi
na

nc
ia

l
fr

ag
ili

ty
0.

02
09

0.
00

16
**

*
�

0.
03

86
0.

00
23

**
*

0.
00

79
0.

00
19

**
*

�
0.

00
66

0.
00

25
**

*
�

0.
01

46
0.

00
21

**
*

B
an

kr
up

tc
y

0.
18

03
0.

00
80

**
*

H
om

eo
w

ne
rs

hi
p

0.
12

34
0.

00
72

**
*

T
he

fin
an

ci
al

ly
ill

ite
ra

te
0.

02
07

0.
00

83
**

0.
03

28
0.

01
23

**
*

0.
02

37
0.

01
15

**
0.

01
32

0.
01

33
0.

02
28

0.
01

10
**

T
he

yo
un

g
0.

01
57

0.
00

49
**

*
0.

00
99

0.
00

73
0.

06
65

0.
00

68
**

*
0.

02
11

0.
00

79
**

*
0.

02
55

0.
00

65
**

*
In

te
ra

ct
io

n
va

ri
ab

le
s

Fe
m

al
e*

In
co

m
e

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
0.

08
56

0.
12

00
�

0.
20

89
0.

10
18

**
0.

03
92

0.
11

18
�

0.
16

47
0.

09
07

*
�

0.
07

62
0.

11
79

$2
5,

00
0

to
le

ss
th

an
$3

5,
00

0
0.

06
24

0.
12

28
�

0.
07

53
0.

10
15

0.
17

87
0.

10
85

*
�

0.
09

29
0.

09
16

0.
15

11
0.

11
61

$3
5,

00
0

to
le

ss
th

an
$5

0,
00

0
0.

05
31

0.
11

34
�

0.
05

68
0.

09
48

0.
19

94
0.

10
09

**
�

0.
12

77
0.

08
56

0.
14

03
0.

10
60

$5
0,

00
0

to
le

ss
th

an
$7

5,
00

0
�

0.
02

72
0.

11
35

�
0.

01
43

0.
09

08
0.

08
80

0.
09

65
�

0.
01

34
0.

08
23

0.
13

91
0.

10
07

$7
5,

00
0

to
le

ss
th

an
$1

00
,0

00
�

0.
13

01
0.

12
65

�
0.

19
14

0.
09

78
**

0.
18

62
0.

10
35

*
�

0.
10

85
0.

09
01

0.
13

67
0.

10
76

$1
00

,0
00

to
le

ss
th

an
$1

50
,0

00
�

0.
11

95
0.

13
96

�
0.

11
25

0.
10

01
0.

16
06

0.
10

68
�

0.
17

05
0.

09
33

*
0.

25
60

0.
10

95
**

$1
50

,0
00

or
m

or
e

�
0.

01
74

0.
16

44
�

0.
01

67
0.

11
27

0.
23

36
0.

11
80

**
�

0.
05

85
0.

10
51

0.
27

87
0.

11
96

**
Fe

m
al

e*
R

is
k-

T
ol

er
an

ce
M

ed
iu

m
�

0.
02

26
0.

06
98

�
0.

02
08

0.
05

12
0.

06
97

0.
05

31
�

0.
01

72
0.

04
81

0.
03

99
0.

05
67

H
ig

h
0.

05
95

0.
08

58
�

0.
10

09
0.

06
54

�
0.

07
47

0.
06

80
�

0.
05

59
0.

06
23

�
0.

05
39

0.
07

04
Fe

m
al

e*
Pe

rc
ei

ve
d

fin
an

ci
al

kn
ow

le
dg

e
L

ow
�

0.
20

68
0.

10
63

*
�

0.
09

29
0.

09
59

0.
04

71
0.

09
43

�
0.

07
88

0.
08

43
�

0.
09

00
0.

10
71

M
ed

iu
m

�
0.

13
14

0.
08

43
�

0.
01

76
0.

06
81

�
0.

01
71

0.
07

01
�

0.
04

99
0.

06
28

0.
07

42
0.

07
61

Fe
m

al
e*

Fi
na

nc
ia

l
fr

ag
ili

ty
le

ve
l

1
0.

11
67

0.
12

03
0.

09
63

0.
06

43
0.

05
53

0.
07

00
0.

07
60

0.
06

46
0.

08
93

0.
06

87
2

0.
11

46
0.

12
07

�
0.

02
78

0.
06

78
0.

08
64

0.
07

32
0.

01
43

0.
06

73
0.

02
99

0.
07

35
3

0.
25

59
0.

11
75

**
�

0.
08

28
0.

07
30

0.
13

49
0.

07
75

*
�

0.
01

02
0.

07
03

0.
01

11
0.

07
93

4
0.

38
61

0.
11

97
**

*
�

0.
04

58
0.

07
86

0.
19

59
0.

08
17

**
0.

07
22

0.
07

34
0.

16
32

0.
08

81
*

(c
on

ti
nu

ed
on

ne
xt

pa
ge

)

418 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
6

(C
on

tin
ue

d)

D
eb

t
co

un
se

lin
g

Sa
vi

ng
s/

in
ve

st
m

en
t

M
or

tg
ag

e/
lo

an
In

su
ra

nc
e

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

5
0.

37
06

0.
12

73
**

*
�

0.
02

75
0.

09
59

0.
18

64
0.

09
52

**
0.

11
04

0.
08

48
0.

12
54

0.
10

21
6

0.
10

15
0.

19
43

0.
06

44
0.

18
53

0.
43

24
0.

16
22

**
*

�
0.

10
30

0.
13

99
0.

13
10

0.
18

15
Y

ou
ng

*I
nc

om
e

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
�

0.
18

42
0.

11
69

�
0.

25
33

0.
10

02
**

0.
06

15
0.

10
86

0.
17

70
0.

08
75

**
0.

14
44

0.
11

86
$2

5,
00

0
to

le
ss

th
an

$3
5,

00
0

�
0.

23
26

0.
11

65
**

�
0.

31
87

0.
10

07
**

*
�

0.
03

19
0.

10
60

0.
11

15
0.

08
84

�
0.

07
12

0.
11

68
$3

5,
00

0
to

le
ss

th
an

$5
0,

00
0

�
0.

10
88

0.
11

04
�

0.
30

20
0.

09
48

**
*

�
0.

15
47

0.
09

95
0.

12
33

0.
08

32
�

0.
08

58
0.

10
84

$5
0,

00
0

to
le

ss
th

an
$7

5,
00

0
�

0.
00

26
0.

11
23

�
0.

30
25

0.
09

14
**

*
�

0.
08

34
0.

09
66

0.
17

68
0.

08
08

**
�

0.
21

67
0.

10
45

**
$7

5,
00

0
to

le
ss

th
an

$1
00

,0
00

�
0.

09
36

0.
12

57
�

0.
49

64
0.

09
83

**
*

�
0.

10
58

0.
10

40
0.

04
76

0.
08

91
�

0.
27

27
0.

11
11

**
$1

00
,0

00
to

le
ss

th
an

$1
50

,0
00

�
0.

13
54

0.
13

76
�

0.
47

52
0.

10
25

**
*

�
0.

10
58

0.
10

83
0.

06
60

0.
09

37
�

0.
31

64
0.

11
54

**
*

$1
50

,0
00

or
m

or
e

�
0.

31
43

0.
16

05
**

�
0.

61
88

0.
11

86
**

*
�

0.
23

46
0.

12
26

*
�

0.
02

58
0.

10
91

�
0.

45
51

0.
12

77
**

*
Y

ou
ng

*R
is

k-
T

ol
er

an
ce

M
ed

iu
m

0.
14

43
0.

06
78

**
�

0.
01

23
0.

05
18

0.
04

71
0.

05
27

0.
03

56
0.

04
79

0.
08

76
0.

05
67

H
ig

h
0.

14
75

0.
08

60
*

0.
18

07
0.

06
64

**
*

0.
09

66
0.

06
92

0.
14

16
0.

06
30

**
0.

26
27

0.
07

10
**

*
Y

ou
ng

*P
er

ce
iv

ed
fin

an
ci

al
kn

ow
le

dg
e

L
ow

�
0.

13
70

0.
10

08
�

0.
08

82
0.

09
05

�
0.

05
97

0.
08

99
�

0.
18

49
0.

07
87

**
�

0.
01

82
0.

10
02

M
ed

iu
m

�
0.

08
31

0.
08

18
�

0.
15

66
0.

06
63

**
�

0.
10

36
0.

06
82

�
0.

14
96

0.
06

11
**

�
0.

03
94

0.
07

39
Y

ou
ng

*F
in

an
ci

al
fr

ag
ili

ty
le

ve
l

1
�

0.
06

71
0.

11
73

0.
16

53
0.

06
91

**
�

0.
07

93
0.

07
35

0.
11

16
0.

06
91

0.
15

41
0.

07
39

**
2

�
0.

20
43

0.
11

62
*

0.
31

97
0.

07
21

**
*

�
0.

27
43

0.
07

60
**

*
0.

04
65

0.
07

14
0.

21
09

0.
07

85
**

*
3

�
0.

38
15

0.
11

52
**

*
0.

36
56

0.
07

64
**

*
�

0.
22

88
0.

08
04

**
*

0.
03

68
0.

07
36

0.
18

20
0.

08
34

**
4

�
0.

40
57

0.
11

74
**

*
0.

45
13

0.
08

25
**

*
�

0.
32

56
0.

08
28

**
*

�
0.

07
93

0.
07

56
0.

28
11

0.
08

95
**

*
5

�
0.

55
29

0.
12

50
**

*
0.

37
21

0.
09

64
**

*
�

0.
33

78
0.

09
52

**
*

�
0.

05
11

0.
08

52
0.

20
28

0.
10

29
**

6
�

0.
45

97
0.

17
21

**
*

0.
36

57
0.

16
49

**
�

0.
24

03
0.

14
88

�
0.

06
66

0.
13

22
0.

08
82

0.
17

75
Il

lit
er

at
e*

In
co

m
e

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
0.

27
35

0.
11

90
**

0.
09

51
0.

10
11

�
0.

04
90

0.
11

02
0.

15
76

0.
08

93
*

�
0.

04
73

0.
11

93
$2

5,
00

0
to

le
ss

th
an

$3
5,

00
0

0.
15

27
0.

12
03

0.
00

18
0.

10
21

�
0.

13
51

0.
10

77
0.

04
14

0.
09

07
�

0.
03

24
0.

11
84

$3
5,

00
0

to
le

ss
th

an
$5

0,
00

0
0.

06
81

0.
11

38
�

0.
02

67
0.

09
75

�
0.

15
42

0.
10

30
0.

13
03

0.
08

69
�

0.
05

76
0.

11
01

$5
0,

00
0

to
le

ss
th

an
$7

5,
00

0
0.

11
31

0.
11

61
0.

00
86

0.
09

45
�

0.
13

86
0.

10
05

0.
10

08
0.

08
52

0.
00

59
0.

10
65

$7
5,

00
0

to
le

ss
th

an
$1

00
,0

00
0.

12
77

0.
13

20
0.

12
47

0.
10

71
�

0.
27

74
0.

11
23

**
0.

06
30

0.
09

83
�

0.
05

41
0.

11
85

$1
00

,0
00

to
le

ss
th

an
$1

50
,0

00
0.

39
37

0.
14

59
**

*
0.

06
97

0.
11

36
�

0.
25

38
0.

12
25

**
0.

08
47

0.
10

81
�

0.
20

23
0.

12
67

$1
50

,0
00

or
m

or
e

0.
45

75
0.

16
81

**
*

0.
28

66
0.

13
72

**
�

0.
25

36
0.

13
99

*
0.

29
96

0.
12

61
**

�
0.

11
63

0.
14

22
(c

on
ti

nu
ed

on
ne

xt
pa

ge
)

419M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
6

(C
on

tin
ue

d)

D
eb

t
co

un
se

lin
g

Sa
vi

ng
s/

in
ve

st
m

en
t

M
or

tg
ag

e/
lo

an
In

su
ra

nc
e

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

Il
lit

er
at

e*
R

is
k-

to
le

ra
nc

e
M

ed
iu

m
�

0.
02

01
0.

06
98

0.
08

78
0.

05
49

0.
04

57
0.

05
71

0.
01

13
0.

05
03

0.
05

02
0.

06
13

H
ig

h
0.

22
39

0.
08

38
**

*
0.

23
48

0.
06

86
**

*
0.

30
93

0.
07

22
**

*
0.

19
00

0.
06

54
**

*
0.

25
23

0.
07

35
**

*
Il

lit
er

at
e*

Pe
rc

ei
ve

d
fin

an
ci

al
kn

ow
le

dg
e

L
ow

�
0.

01
87

0.
10

37
0.

08
57

0.
09

40
0.

16
39

0.
09

12
*

0.
14

99
0.

08
13

*
0.

00
97

0.
10

44
M

ed
iu

m
�

0.
08

28
0.

08
56

0.
19

43
0.

07
08

**
*

0.
03

04
0.

07
29

0.
04

04
0.

06
45

0.
03

70
0.

07
98

Il
lit

er
at

e*
Fi

na
nc

ia
l

fr
ag

ili
ty

le
ve

l
1

�
0.

10
71

0.
12

74
�

0.
05

88
0.

07
89

�
0.

05
75

0.
08

96
�

0.
02

38
0.

07
98

0.
02

54
0.

08
60

2
�

0.
12

30
0.

12
29

0.
02

92
0.

07
90

0.
01

66
0.

08
77

0.
05

28
0.

07
86

0.
13

16
0.

08
75

3
�

0.
38

04
0.

12
30

**
*

�
0.

00
44

0.
08

35
�

0.
18

14
0.

09
17

**
0.

06
49

0.
08

06
�

0.
04

12
0.

09
20

4
�

0.
44

84
0.

12
44

**
*

�
0.

08
20

0.
08

86
�

0.
11

69
0.

09
40

0.
03

61
0.

08
21

�
0.

06
39

0.
09

93
5

�
0.

39
45

0.
13

12
**

*
0.

02
22

0.
10

19
�

0.
17

58
0.

10
42

*
0.

01
09

0.
09

07
�

0.
17

11
0.

11
09

6
�

0.
07

88
0.

18
15

0.
02

66
0.

17
64

�
0.

09
26

0.
15

70
�

0.
15

04
0.

13
80

�
0.

03
80

0.
18

11
N

um
be

r
of

ob
se

rv
at

io
ns

25
,5

09
25

,5
09

25
,5

09
25

,5
09

25
,5

09

T
he

yo
un

g
va

ri
ab

le
is

in
cl

ud
ed

in
a

se
pa

ra
te

re
gr

es
si

on
w

ith
ou

t
th

e
ag

e
ra

ng
es

to
av

oi
d

co
lli

ne
ar

ity
.

*S
ig

ni
fic

an
ce

at
10

%
le

ve
l;

**
si

gn
ifi

ca
nc

e
at

5%
le

ve
l;

**
*s

ig
ni

fic
an

ce
at

1%
le

ve
l.

420 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



To examine additional reasons that can explain the demand for different types of advice,
the article uses as a proxy for liquidity constraints the difficulty to cover expenses and pay
one’s bills. The t test results in Table 7 indicate that respondents who do not experience
liquidity constraints show a higher demand for advice about saving/investment, mortgages/
loans, and insurance compared with those with a liquidity problem. Furthermore, homeown-
ership has been used as a proxy for socioeconomic status and financial stability. The t test
results in Table 8 show significant differences between homeowners and non-homeowners.
The percentage of homeowners who seek financial advice is higher than that for non-
homeowners across all types of advice except debt counseling. In addition, Table 9 shows
that seeking debt counseling by respondents who declared bankruptcy is significantly
different from those who did not experience bankruptcy.

To test the presence of significant differences in financial advice seeking behavior by
females, the young, and the financially illiterate, the regression model in Table 6 uses
interaction terms between those groups and the factors of interest over the whole sample. The
results for females indicate that financial fragility only is related positively to seeking debt
counseling and advice about mortgages/loans for respondents who experience at least three
signs of financial difficulty. For the young group, the results show a negative relation
between income and seeking advice about savings/investment, and tax planning. High risk
tolerance is related positively to seeking advice about savings/investment, insurance, and tax
planning. However, financial fragility is related negatively to debt counseling and advice
about mortgages, and positively to advice about savings/investment, and tax planning. For
the financially illiterate group, high risk tolerance is related positively to seeking all types
of financial advice, while financial fragility has a negative association to seeking debt
counseling.

Table 7 T-test of means for financial advice (liquidity constraint)

Type of advice Have difficulty No difficulty

Mean Standard error Mean Standard error

Debt counseling 0.1186 0.0033 0.0523 0.0027 ***
Savings/investment 0.2201 0.0041 0.3785 0.0054 ***
Mortgages/loans 0.1934 0.0039 0.2137 0.0046 ***
Tax planning 0.1512 0.0036 0.2220 0.0046 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

Table 8 T-test of means for financial advice (home ownership)

Type of advice Yes No

Mean Standard error Mean Standard error

Savings/investment 0.3668 0.0046 0.1782 0.0046 ***
Mortgages/loans 0.2671 0.0042 0.1130 0.0037 ***
Insurance 0.3533 0.0045 0.2338 0.0050 ***
Tax planning 0.2386 0.0041 0.1028 0.0036 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

421M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



7.1. Subsample results: Females versus males

The female variable is found to be significant for seeking financial advice about savings/
investment, and insurance only. The probit regression results for the female subsample are
provided in Table 10. Income and risk tolerance are related positively, while a low perception
of financial knowledge and financial fragility are related negatively to seeking both types of
financial advice. These findings for the female subsample are identical to the findings for the
male subsample in Table 11, except for the effect of financial knowledge. A low perception
of financial knowledge has a greater effect on the demand for financial advice for females
compared with males. Therefore, the characteristics that influence the demand for financial
advice for females and males appear to be similar and gender differences do not distinguish
the consumption of financial advice between these two groups.

7.2. Subsample results: Young versus old

The young (aged 18–44)10 variable is found to be significant for seeking all types of
financial advice, except savings/investment. Table 12 reports the estimates of four probit
regression models for the young subsample. Income and risk tolerance are related positively
to seeking all types of financial advice. A low perception of financial knowledge decreases
the probability of seeking financial advice about mortgages/loans, insurance, and tax plan-
ning, while financial fragility is related positively to seeking debt counseling and negatively
to seeking advice about insurance and tax planning. These findings are similar to those for
the old group in Table 13, except for the low perception of financial knowledge, which does
not appear as significant for the old compared with the young subsample. Age classification
does not explain the consumption of financial advice.

7.3. Subsample results: Financially illiterate versus financially literate

The financially illiterate variable is found to be significant for seeking all types of
financial advice except insurance. Table 14 provides the estimates of four probit regres-
sion models for the financially illiterate subsample. Income and risk tolerance are related
positively to seeking the four types of financial advice. A low perception of financial
knowledge is related negatively to seeking advice about mortgages/loans and tax plan-
ning and appears to have no significance on seeking advice about debt and savings/
investment. While financial fragility increases the probability of seeking debt counsel-
ing, it decreases the probability of seeking advice about savings/investment and tax

Table 9 T-test of means for financial advice (bankruptcy)

Type of advice Bankrupt No bankruptcy

Mean Standard error Mean Standard error

Debt counseling 0.4873 0.0208 0.0760 0.0021 ***

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

422 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



planning. These findings are similar to the results for the financially literate subsample
in Table 15. Therefore, the factors affecting the demand for financial advice show no
significant differences based on the financial literacy level only.

8. Conclusion

This article uses the 2012 NFCS to investigate the correlates of seeking five types of
financial advice: debt counseling, savings/investment, mortgages/loans, insurance, and tax

Table 10 Financial advice probit (female)

Independent variables Savings/investment Insurance

Marg. effects (SE) Marg. effects (SE)

Race (non-White)
White �0.0024 0.0096 �0.0101 0.0103

Age (65�)
18–24 �0.0375 0.0184 ** 0.0049 0.0210
25–34 �0.1167 0.0170 *** �0.0246 0.0191
35–44 �0.1710 0.0167 *** �0.0269 0.0186
45–54 �0.1207 0.0145 *** �0.0160 0.0166
55–64 �0.0570 0.0134 *** 0.0052 0.0156

Education level (college or more)
High school or less �0.1095 0.0113 *** �0.0786 0.0125 ***
Some college �0.0429 0.0105 *** �0.0023 0.0116

Marital status (married)
Living with a partner 0.0224 0.0164 �0.0122 0.0171
Single 0.0218 0.0106 ** �0.0002 0.0114

Number of children (no children)
One child 0.0175 0.0133 0.0570 0.0141 ***
Two children 0.0232 0.0151 0.0674 0.0157 ***
Three children �0.0093 0.0204 0.0493 0.0206 **
Four children or more 0.0711 0.0240 *** 0.0804 0.0248 ***
No financially dependent children �0.0035 0.0126 0.0176 0.0141

Annual income (less than $15,000)
$15,000 to less than $25,000 0.0302 0.0181 * 0.0819 0.0183 ***
$25,000 to less than $35,000 0.0610 0.0186 *** 0.0909 0.0187 ***
$35,000 to less than $50,000 0.0758 0.0177 *** 0.0996 0.0185 ***
$50,000 to less than $75,000 0.1137 0.0175 *** 0.1318 0.0184 ***
$75,000 to less than $100,000 0.1058 0.0196 *** 0.1035 0.0209 ***
$100,000 to less than $150,000 0.1300 0.0205 *** 0.1087 0.0223 ***
$150,000 or more 0.1728 0.0233 *** 0.1509 0.0251 ***

Risk-tolerance level (low)
Medium 0.1154 0.0092 *** 0.0774 0.0099 ***
High 0.1762 0.0138 *** 0.1341 0.0151 ***

Perceived financial knowledge (high)
Low �0.0418 0.0168 *** �0.0563 0.0167 ***
Medium �0.0188 0.0124 �0.0403 0.0128 ***

Financial literacy 0.0311 0.0033 *** 0.0312 0.0035 ***
Financial fragility �0.0407 0.0031 *** �0.0060 0.0034 *
Number of observations 14,127 14,127

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

423M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



planning. Although only 24% of respondents are satisfied with their personal financial
condition, the use of financial advice is within the range of 9–30% of the U.S. population,
depending on the type of advice. While 73% of respondents assessed themselves as finan-
cially knowledgeable, only 16% were able to answer five basic financial literacy questions
correctly. This discrepancy raises the complex question of why individuals are reluctant to
seek professional financial advice.

The analysis of the multivariate results reveals a consistent effect of key factors on the
demand for the five types of financial advice and no significant differences have been found
among the subsamples, which are defined by gender, age, and financial literacy. Income and

Table 11 Financial advice probit (male)

Independent variables Savings/investment Insurance

Marg. effects (SE) Marg. effects (SE)

Race (non-White)
White �0.0004 0.0108 �0.0073 0.0117

Age (65�)
18–24 0.0756 0.0212 *** 0.1025 0.0238 ***
25–34 0.0312 0.0175 * 0.1054 0.0196 ***
35–44 �0.0501 0.0172 *** 0.0502 0.0193 ***
45–54 �0.0691 0.0153 *** 0.0392 0.0173 **
55–64 �0.0174 0.0141 0.0281 0.0160 *

Education level (college or more)
High school or less �0.0808 0.0124 *** �0.0615 0.0134 ***
Some college �0.0439 0.0106 *** �0.0251 0.0116 **

Marital status (married)
Living with a partner �0.0021 0.0184 �0.0074 0.0198
Single �0.0159 0.0120 �0.0452 0.0130 ***

Number of children (no children)
One child 0.0519 0.0147 *** 0.0703 0.0159 ***
Two children 0.0476 0.0160 *** 0.0900 0.0174 ***
Three children 0.0429 0.0221 * 0.0365 0.0236
Four children or more 0.0671 0.0311 ** 0.1042 0.0320 ***
No financially dependent children 0.0350 0.0133 *** 0.0401 0.0147 ***

Annual income (less than $15,000)
$15,000 to less than $25,000 0.0920 0.0222 *** 0.1259 0.0228 ***
$25,000 to less than $35,000 0.0832 0.0220 *** 0.1146 0.0231 ***
$35,000 to less than $50,000 0.0916 0.0207 *** 0.1327 0.0215 ***
$50,000 to less than $75,000 0.1096 0.0204 *** 0.1275 0.0213 ***
$75,000 to less than $100,000 0.1446 0.0218 *** 0.1260 0.0233 ***
$100,000 to less than $150,000 0.1582 0.0227 *** 0.1582 0.0241 ***
$150,000 or more 0.1624 0.0257 *** 0.1565 0.0272 ***

Risk-tolerance level (low)
Medium 0.1066 0.0109 *** 0.0697 0.0119 ***
High 0.1590 0.0128 *** 0.1046 0.0142 ***

Perceived financial knowledge (high)
Low �0.0234 0.0214 �0.0453 0.0214 **
Medium �0.0192 0.0148 �0.0240 0.0157

Financial literacy 0.0151 0.0036 *** 0.0124 0.0039 ***
Financial fragility �0.0373 0.0035 *** �0.0080 0.0037 **
Number of observations 11,382 11,382

*Significance at 10% level; **significance at 5% level; ***significance at 1% level.

424 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
12

Fi
na

nc
ia

l
ad

vi
ce

pr
ob

it
(t

he
yo

un
g

18
–

44
)

In
de

pe
nd

en
t

va
ri

ab
le

s
D

eb
t

co
un

se
lin

g
M

or
tg

ag
e/

lo
an

In
su

ra
nc

e
T

ax
pl

an
ni

ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

G
en

de
r

(m
al

e)
Fe

m
al

e
�

0.
01

57
0.

00
69

**
�

0.
01

48
0.

00
98

0.
00

20
0.

01
07

�
0.

02
81

0.
00

88
**

*
R

ac
e

(n
on

-W
hi

te
)

W
hi

te
�

0.
01

49
0.

00
68

**
0.

00
98

0.
01

00
�

0.
02

20
0.

01
07

**
�

0.
03

32
0.

00
89

**
*

E
du

ca
tio

n
le

ve
l

(c
ol

le
ge

or
m

or
e)

H
ig

h
sc

ho
ol

or
le

ss
�

0.
03

76
0.

00
91

**
*

�
0.

07
87

0.
01

29
**

*
�

0.
06

46
0.

01
39

**
*

�
0.

04
59

0.
01

17
**

*
So

m
e

co
lle

ge
�

0.
01

80
0.

00
80

**
�

0.
02

78
0.

01
15

**
�

0.
02

68
0.

01
27

**
�

0.
03

14
0.

01
04

**
*

M
ar

ita
l

st
at

us
(m

ar
ri

ed
)

L
iv

in
g

w
ith

a
pa

rt
ne

r
�

0.
00

75
0.

01
13

�
0.

02
46

0.
01

54
�

0.
01

24
0.

01
68

�
0.

01
36

0.
01

41
Si

ng
le

�
0.

00
03

0.
00

90
�

0.
08

74
0.

01
26

**
*

�
0.

03
62

0.
01

37
**

*
�

0.
03

01
0.

01
12

**
*

N
um

be
r

of
ch

ild
re

n
(n

o
ch

ild
re

n)
O

ne
ch

ild
0.

05
44

0.
00

96
**

*
0.

03
26

0.
01

33
**

0.
07

14
0.

01
46

**
*

0.
04

18
0.

01
20

**
*

T
w

o
ch

ild
re

n
0.

06
10

0.
01

02
**

*
0.

03
64

0.
01

39
**

*
0.

08
19

0.
01

54
**

*
0.

03
28

0.
01

26
**

*
T

hr
ee

ch
ild

re
n

0.
04

74
0.

01
24

**
*

0.
03

53
0.

01
80

**
0.

03
93

0.
01

95
**

0.
02

38
0.

01
66

Fo
ur

ch
ild

re
n

or
m

or
e

0.
06

08
0.

01
48

**
*

0.
04

52
0.

02
16

**
0.

06
47

0.
02

37
**

*
0.

02
61

0.
01

95
N

o
fin

an
ci

al
ly

de
pe

nd
en

t
ch

ild
re

n
0.

00
93

0.
01

62
�

0.
00

40
0.

02
36

0.
01

04
0.

02
38

0.
00

27
0.

02
15

A
nn

ua
l

in
co

m
e

(l
es

s
th

an
$1

5,
00

0)
$1

5,
00

0
to

le
ss

th
an

$2
5,

00
0

0.
04

30
0.

01
30

**
*

0.
07

01
0.

02
03

**
*

0.
12

07
0.

01
99

**
*

0.
06

19
0.

01
79

**
*

$2
5,

00
0

to
le

ss
th

an
$3

5,
00

0
0.

04
54

0.
01

33
**

*
0.

09
20

0.
01

97
**

*
0.

10
74

0.
02

02
**

*
0.

05
51

0.
01

78
**

*
$3

5,
00

0
to

le
ss

th
an

$5
0,

00
0

0.
06

28
0.

01
26

**
*

0.
08

06
0.

01
88

**
*

0.
12

58
0.

01
95

**
*

0.
07

28
0.

01
69

**
*

$5
0,

00
0

to
le

ss
th

an
$7

5,
00

0
0.

07
20

0.
01

27
**

*
0.

13
05

0.
01

85
**

*
0.

14
51

0.
01

92
**

*
0.

07
69

0.
01

67
**

*
$7

5,
00

0
to

le
ss

th
an

$1
00

,0
00

0.
07

22
0.

01
42

**
*

0.
14

29
0.

02
07

**
*

0.
10

31
0.

02
17

**
*

0.
08

72
0.

01
86

**
*

$1
00

,0
00

to
le

ss
th

an
$1

50
,0

00
0.

06
23

0.
01

67
**

*
0.

15
88

0.
02

26
**

*
0.

12
99

0.
02

41
**

*
0.

09
00

0.
02

03
**

*
$1

50
,0

00
or

m
or

e
0.

05
21

0.
01

87
**

*
0.

16
89

0.
02

58
**

*
0.

14
03

0.
02

82
**

*
0.

11
75

0.
02

27
**

*
R

is
k-

to
le

ra
nc

e
le

ve
l

(l
ow

)
M

ed
iu

m
0.

02
23

0.
00

79
**

*
0.

05
43

0.
01

12
**

*
0.

07
96

0.
01

20
**

*
0.

06
45

0.
01

06
**

*
H

ig
h

0.
05

79
0.

00
89

**
*

0.
09

50
0.

01
35

**
*

0.
13

33
0.

01
46

**
*

0.
12

92
0.

01
20

**
*

Pe
rc

ei
ve

d
fin

an
ci

al
kn

ow
le

dg
e

(h
ig

h)
L

ow
�

0.
01

66
0.

01
16

�
0.

06
61

0.
01

79
**

*
�

0.
06

86
0.

01
87

**
*

�
0.

03
79

0.
01

68
**

M
ed

iu
m

�
0.

01
98

0.
00

92
**

�
0.

03
12

0.
01

32
**

�
0.

05
02

0.
01

42
**

*
�

0.
01

84
0.

01
21

Fi
na

nc
ia

l
lit

er
ac

y
�

0.
00

73
0.

00
24

**
*

0.
01

63
0.

00
35

**
*

0.
01

87
0.

00
38

**
*

0.
00

23
0.

00
31

Fi
na

nc
ia

l
fr

ag
ili

ty
0.

01
63

0.
00

24
**

*
�

0.
00

55
0.

00
35

�
0.

00
81

0.
00

37
**

�
0.

01
25

0.
00

32
**

*
N

um
be

r
of

ob
se

rv
at

io
ns

11
,1

35
11

,1
35

11
,1

35
11

,1
35

*S
ig

ni
fic

an
ce

at
10

%
le

ve
l;

**
si

gn
ifi

ca
nc

e
at

5%
le

ve
l;

**
*s

ig
ni

fic
an

ce
at

1%
le

ve
l.

425M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
13

Fi
na

nc
ia

l
ad

vi
ce

pr
ob

it
(t

he
ol

d
45

�
)

In
de

pe
nd

en
t

va
ri

ab
le

s
D

eb
t

co
un

se
lin

g
M

or
tg

ag
e/

lo
an

In
su

ra
nc

e
T

ax
pl

an
ni

ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

ge
(S

E
)

G
en

de
r

(m
al

e)
Fe

m
al

e
0.

00
39

0.
00

59
0.

01
61

0.
00

71
**

0.
06

67
0.

00
89

**
*

0.
03

30
0.

00
66

**
*

R
ac

e
(n

on
-W

hi
te

)
W

hi
te

�
0.

02
99

0.
00

69
**

*
0.

03
02

0.
00

90
**

*
0.

00
24

0.
01

12
0.

02
09

0.
00

85
**

E
du

ca
tio

n
le

ve
l

(c
ol

le
ge

or
m

or
e)

H
ig

h
sc

ho
ol

or
le

ss
�

0.
02

36
0.

00
75

**
*

�
0.

04
64

0.
00

95
**

*
�

0.
07

00
0.

01
19

**
*

�
0.

06
67

0.
00

89
**

*
So

m
e

co
lle

ge
�

0.
01

06
0.

00
70

�
0.

00
18

0.
00

82
0.

00
01

0.
01

05
�

0.
02

61
0.

00
75

**
*

M
ar

ita
l

st
at

us
(m

ar
ri

ed
)

L
iv

in
g

w
ith

a
pa

rt
ne

r
0.

01
05

0.
01

29
0.

01
01

0.
01

62
�

0.
00

62
0.

02
07

�
0.

02
76

0.
01

65
*

Si
ng

le
0.

00
37

0.
00

70
�

0.
00

31
0.

00
89

0.
00

14
0.

01
09

0.
00

86
0.

00
82

N
um

be
r

of
ch

ild
re

n
(n

o
ch

ild
re

n)
O

ne
ch

ild
0.

01
33

0.
00

95
0.

05
39

0.
01

19
**

*
0.

04
71

0.
01

49
**

*
0.

02
03

0.
01

13
*

T
w

o
ch

ild
re

n
0.

01
58

0.
01

09
0.

05
40

0.
01

39
**

*
0.

05
42

0.
01

77
**

*
0.

01
38

0.
01

33
T

hr
ee

ch
ild

re
n

0.
03

52
0.

01
52

**
0.

06
90

0.
02

05
**

*
0.

03
07

0.
02

60
�

0.
04

40
0.

02
00

**
Fo

ur
ch

ild
re

n
or

m
or

e
0.

05
38

0.
01

91
**

*
0.

08
28

0.
02

64
**

*
0.

12
25

0.
03

58
**

*
0.

01
53

0.
02

81
N

o
fin

an
ci

al
ly

de
pe

nd
en

t
ch

ild
re

n
�

0.
00

56
0.

00
76

0.
02

43
0.

00
95

**
0.

02
36

0.
01

16
**

0.
00

60
0.

00
89

A
nn

ua
l

in
co

m
e

(l
es

s
th

an
$1

5,
00

0)
$1

5,
00

0
to

le
ss

th
an

$2
5,

00
0

0.
05

92
0.

01
22

**
*

0.
05

61
0.

01
91

**
*

0.
06

16
0.

02
05

**
*

0.
03

26
0.

01
95

*
$2

5,
00

0
to

le
ss

th
an

$3
5,

00
0

0.
07

44
0.

01
22

**
*

0.
10

67
0.

01
87

**
*

0.
07

77
0.

02
09

**
*

0.
07

64
0.

01
90

**
*

$3
5,

00
0

to
le

ss
th

an
$5

0,
00

0
0.

07
70

0.
01

19
**

*
0.

13
20

0.
01

80
**

*
0.

08
74

0.
02

01
**

*
0.

09
31

0.
01

79
**

*
$5

0,
00

0
to

le
ss

th
an

$7
5,

00
0

0.
07

14
0.

01
26

**
*

0.
16

38
0.

01
79

**
*

0.
09

74
0.

02
02

**
*

0.
12

78
0.

01
76

**
*

$7
5,

00
0

to
le

ss
th

an
$1

00
,0

00
0.

08
41

0.
01

43
**

*
0.

19
09

0.
01

91
**

*
0.

10
50

0.
02

23
**

*
0.

14
95

0.
01

88
**

*
$1

00
,0

00
to

le
ss

th
an

$1
50

,0
00

0.
08

09
0.

01
51

**
*

0.
20

79
0.

01
95

**
*

0.
12

43
0.

02
27

**
*

0.
16

61
0.

01
90

**
*

$1
50

,0
00

or
m

or
e

0.
08

65
0.

01
73

**
*

0.
25

01
0.

02
11

**
*

0.
15

06
0.

02
53

**
*

0.
21

59
0.

02
03

**
*

R
is

k-
to

le
ra

nc
e

le
ve

l
(l

ow
)

M
ed

iu
m

0.
00

20
0.

00
66

0.
03

19
0.

00
78

**
*

0.
07

35
0.

00
97

**
*

0.
03

91
0.

00
74

**
*

H
ig

h
0.

03
53

0.
00

94
**

*
0.

04
97

0.
01

14
**

*
0.

09
24

0.
01

43
**

*
0.

06
50

0.
01

04
**

*
Pe

rc
ei

ve
d

fin
an

ci
al

kn
ow

le
dg

e
(h

ig
h)

L
ow

�
0.

00
51

0.
01

04
�

0.
05

16
0.

01
49

**
*

�
0.

02
11

0.
01

82
�

0.
02

71
0.

01
52

*
M

ed
iu

m
�

0.
00

98
0.

00
82

�
0.

00
81

0.
01

11
�

0.
01

11
0.

01
37

�
0.

01
06

0.
01

10
Fi

na
nc

ia
l

lit
er

ac
y

�
0.

00
25

0.
00

23
0.

01
88

0.
00

29
**

*
0.

02
52

0.
00

35
**

*
0.

01
92

0.
00

27
**

*
Fi

na
nc

ia
l

fr
ag

ili
ty

0.
02

46
0.

00
21

**
*

0.
00

92
0.

00
26

**
*

�
0.

00
64

0.
00

33
*

�
0.

01
49

0.
00

26
**

*
N

um
be

r
of

ob
se

rv
at

io
ns

14
,3

56
14

,3
56

14
,3

56
14

,3
56

*S
ig

ni
fic

an
ce

at
10

%
le

ve
l;

**
si

gn
ifi

ca
nc

e
at

5%
le

ve
l;

**
*s

ig
ni

fic
an

ce
at

1%
le

ve
l.

426 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
14

Fi
na

nc
ia

l
ad

vi
ce

pr
ob

it
(t

he
fin

an
ci

al
ly

ill
ite

ra
te

)

In
de

pe
nd

en
t

va
ri

ab
le

s
D

eb
t

co
un

se
lin

g
Sa

vi
ng

s/
in

ve
st

m
en

t
M

or
tg

ag
e/

lo
an

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

G
en

de
r

(m
al

e)
Fe

m
al

e
�

0.
01

86
0.

00
85

**
�

0.
01

48
0.

01
14

�
0.

01
94

0.
01

04
*

�
0.

02
27

0.
00

99
**

R
ac

e
(n

on
-W

hi
te

)
W

hi
te

�
0.

03
01

0.
00

86
**

*
�

0.
01

84
0.

01
15

0.
00

49
0.

01
06

�
0.

02
10

0.
01

00
**

A
ge

(6
5�

)
18

–2
4

0.
01

38
0.

01
94

0.
03

17
0.

02
26

0.
10

17
0.

02
34

**
*

0.
06

91
0.

02
14

**
*

25
–3

4
0.

02
37

0.
01

84
�

0.
00

91
0.

02
22

0.
10

95
0.

02
20

**
*

0.
04

54
0.

02
06

**
35

–4
4

�
0.

00
84

0.
01

92
�

0.
09

44
0.

02
29

**
*

0.
04

53
0.

02
29

**
�

0.
01

49
0.

02
12

45
–5

4
0.

00
12

0.
01

83
�

0.
07

55
0.

02
11

**
*

0.
02

90
0.

02
18

�
0.

02
11

0.
02

00
55

–6
4

0.
00

23
0.

01
83

�
0.

01
53

0.
02

11
0.

02
98

0.
02

21
�

0.
01

24
0.

02
02

E
du

ca
tio

n
le

ve
l

(c
ol

le
ge

or
m

or
e)

H
ig

h
sc

ho
ol

or
le

ss
�

0.
05

63
0.

01
07

**
*

�
0.

11
03

0.
01

45
**

*
�

0.
08

04
0.

01
35

**
*

�
0.

07
09

0.
01

30
**

*
So

m
e

co
lle

ge
�

0.
04

53
0.

01
06

**
*

�
0.

04
89

0.
01

45
**

*
�

0.
03

36
0.

01
31

**
�

0.
04

67
0.

01
26

**
*

M
ar

ita
l

st
at

us
(m

ar
ri

ed
)

L
iv

in
g

w
ith

a
pa

rt
ne

r
�

0.
01

15
0.

01
41

0.
03

09
0.

01
89

�
0.

01
48

0.
01

66
0.

00
13

0.
01

61
Si

ng
le

�
0.

00
72

0.
01

03
0.

01
51

0.
01

37
�

0.
03

22
0.

01
22

**
*

�
0.

02
16

0.
01

17
*

N
um

be
r

of
ch

ild
re

n
(n

o
ch

ild
re

n)
O

ne
ch

ild
0.

04
62

0.
01

19
**

*
0.

05
31

0.
01

61
**

*
0.

05
06

0.
01

41
**

*
0.

04
68

0.
01

38
**

*
T

w
o

ch
ild

re
n

0.
04

13
0.

01
36

**
*

0.
04

27
0.

01
85

**
0.

06
31

0.
01

59
**

*
0.

03
19

0.
01

58
**

T
hr

ee
ch

ild
re

n
0.

05
27

0.
01

67
**

*
�

0.
02

13
0.

02
49

0.
04

64
0.

02
05

**
0.

03
23

0.
02

03
Fo

ur
ch

ild
re

n
or

m
or

e
0.

04
23

0.
02

03
**

0.
03

31
0.

02
84

0.
04

94
0.

02
41

**
0.

03
06

0.
02

41
N

o
fin

an
ci

al
ly

de
pe

nd
en

t
ch

ild
re

n
0.

00
39

0.
01

39
0.

01
92

0.
01

71
0.

02
68

0.
01

68
0.

01
59

0.
01

69
A

nn
ua

l
in

co
m

e
(l

es
s

th
an

$1
5,

00
0)

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
0.

07
75

0.
01

40
**

*
0.

06
60

0.
01

89
**

*
0.

06
22

0.
01

82
**

*
0.

04
61

0.
01

78
**

*
$2

5,
00

0
to

le
ss

th
an

$3
5,

00
0

0.
07

26
0.

01
45

**
*

0.
06

71
0.

02
02

**
*

0.
08

42
0.

01
80

**
*

0.
06

27
0.

01
83

**
*

$3
5,

00
0

to
le

ss
th

an
$5

0,
00

0
0.

07
65

0.
01

45
**

*
0.

07
28

0.
01

98
**

*
0.

08
47

0.
01

81
**

*
0.

07
32

0.
01

74
**

*
$5

0,
00

0
to

le
ss

th
an

$7
5,

00
0

0.
07

84
0.

01
53

**
*

0.
11

16
0.

01
99

**
*

0.
12

43
0.

01
82

**
*

0.
09

92
0.

01
74

**
*

$7
5,

00
0

to
le

ss
th

an
$1

00
,0

00
0.

09
12

0.
01

83
**

*
0.

13
62

0.
02

37
**

*
0.

12
68

0.
02

15
**

*
0.

10
50

0.
02

07
**

*
$1

00
,0

00
to

le
ss

th
an

$1
50

,0
00

0.
10

80
0.

02
10

**
*

0.
15

54
0.

02
56

**
*

0.
14

31
0.

02
46

**
*

0.
09

79
0.

02
32

**
*

$1
50

,0
00

or
m

or
e

0.
11

09
0.

02
30

**
*

0.
21

52
0.

03
14

**
*

0.
16

36
0.

02
78

**
*

0.
14

39
0.

02
60

**
*

R
is

k-
to

le
ra

nc
e

le
ve

l
(l

ow
)

M
ed

iu
m

0.
01

35
0.

00
95

0.
10

92
0.

01
22

**
*

0.
04

38
0.

01
13

**
*

0.
05

17
0.

01
13

**
*

H
ig

h
0.

07
04

0.
01

14
**

*
0.

18
07

0.
01

53
**

*
0.

10
00

0.
01

42
**

*
0.

11
24

0.
01

34
**

*
Pe

rc
ei

ve
d

fin
an

ci
al

kn
ow

le
dg

e
(h

ig
h)

L
ow

�
0.

01
57

0.
01

27
�

0.
02

92
0.

01
86

�
0.

03
85

0.
01

58
**

�
0.

03
38

0.
01

70
**

M
ed

iu
m

�
0.

02
74

0.
01

13
**

0.
00

13
0.

01
50

�
0.

01
71

0.
01

36
�

0.
01

00
0.

01
36

Fi
na

nc
ia

l
fr

ag
ili

ty
0.

01
76

0.
00

30
**

*
�

0.
03

96
0.

00
39

**
*

�
0.

00
34

0.
00

36
�

0.
01

81
0.

00
35

**
*

N
um

be
r

of
ob

se
rv

at
io

ns
8,

92
1

8,
92

1
8,

92
1

8,
92

1

*S
ig

ni
fic

an
ce

at
10

%
le

ve
l;

**
si

gn
ifi

ca
nc

e
at

5%
le

ve
l;

**
*s

ig
ni

fic
an

ce
at

1%
le

ve
l.

427M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



T
ab

le
15

Fi
na

nc
ia

l
ad

vi
ce

pr
ob

it
(t

he
fin

an
ci

al
ly

lit
er

at
e)

In
de

pe
nd

en
t

va
ri

ab
le

s
D

eb
t

co
un

se
lin

g
Sa

vi
ng

s/
in

ve
st

m
en

t
M

or
tg

ag
e/

lo
an

T
ax

pl
an

ni
ng

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

M
ar

g.
ef

fe
ct

s
(S

E
)

G
en

de
r

(m
al

e)
Fe

m
al

e
0.

00
01

0.
00

53
0.

04
73

0.
00

76
**

*
0.

01
31

0.
00

70
*

0.
01

83
0.

00
66

**
*

R
ac

e
(n

on
-W

hi
te

)
W

hi
te

�
0.

01
40

0.
00

61
**

0.
01

20
0.

00
95

0.
03

48
0.

00
85

**
*

0.
00

22
0.

00
82

A
ge

(6
5�

)
18

–2
4

0.
03

28
0.

01
49

**
�

0.
01

54
0.

01
99

0.
05

55
0.

01
97

**
*

0.
00

53
0.

01
84

25
–3

4
0.

03
92

0.
01

13
**

*
�

0.
07

06
0.

01
53

**
*

0.
11

11
0.

01
43

**
*

�
0.

01
19

0.
01

33
35

–4
4

0.
02

16
0.

01
07

**
�

0.
12

34
0.

01
45

**
*

0.
05

67
0.

01
36

**
*

�
0.

05
93

0.
01

27
**

*
45

–5
4

0.
00

88
0.

01
02

�
0.

10
99

0.
01

26
**

*
0.

01
89

0.
01

22
�

0.
05

51
0.

01
11

**
*

55
–6

4
0.

02
95

0.
00

93
**

*
�

0.
04

67
0.

01
13

**
*

0.
02

12
0.

01
11

*
�

0.
02

19
0.

00
98

**
E

du
ca

tio
n

le
ve

l
(c

ol
le

ge
or

m
or

e)
H

ig
h

sc
ho

ol
or

le
ss

�
0.

02
35

0.
00

72
**

*
�

0.
09

76
0.

01
03

**
*

�
0.

06
32

0.
00

96
**

*
�

0.
06

16
0.

00
92

**
*

So
m

e
co

lle
ge

�
0.

00
46

0.
00

62
�

0.
05

04
0.

00
89

**
*

�
0.

01
08

0.
00

82
�

0.
03

00
0.

00
77

**
*

M
ar

ita
l

st
at

us
(m

ar
ri

ed
)

L
iv

in
g

w
ith

a
pa

rt
ne

r
0.

00
59

0.
01

10
�

0.
00

26
0.

01
63

�
0.

00
09

0.
01

46
�

0.
03

33
0.

01
49

**
Si

ng
le

0.
00

80
0.

00
67

0.
00

45
0.

00
99

�
0.

04
47

0.
00

94
**

*
�

0.
00

92
0.

00
87

N
um

be
r

of
ch

ild
re

n
(n

o
ch

ild
re

n)
O

ne
ch

ild
0.

03
49

0.
00

85
**

*
0.

02
21

0.
01

25
*

0.
04

39
0.

01
15

**
*

0.
04

06
0.

01
11

**
*

T
w

o
ch

ild
re

n
0.

05
06

0.
00

89
**

*
0.

02
96

0.
01

38
**

0.
04

55
0.

01
23

**
*

0.
04

58
0.

01
21

**
*

T
hr

ee
ch

ild
re

n
0.

03
23

0.
01

16
**

*
0.

03
78

0.
01

96
*

0.
06

09
0.

01
72

**
*

0.
00

66
0.

01
70

Fo
ur

ch
ild

re
n

or
m

or
e

0.
06

87
0.

01
43

**
*

0.
08

96
0.

02
64

**
*

0.
08

43
0.

02
25

**
*

0.
04

99
0.

02
22

**
N

o
fin

an
ci

al
ly

de
pe

nd
en

t
ch

ild
re

n
0.

00
75

0.
00

84
0.

01
35

0.
01

12
0.

01
72

0.
01

07
0.

01
13

0.
00

99
A

nn
ua

l
in

co
m

e
(l

es
s

th
an

$1
5,

00
0)

$1
5,

00
0

to
le

ss
th

an
$2

5,
00

0
0.

02
53

0.
01

24
**

0.
05

43
0.

02
08

**
*

0.
06

77
0.

02
05

**
*

0.
05

29
0.

02
05

**
*

$2
5,

00
0

to
le

ss
th

an
$3

5,
00

0
0.

04
40

0.
01

24
**

*
0.

08
09

0.
02

05
**

*
0.

11
26

0.
01

97
**

*
0.

07
01

0.
01

97
**

*
$3

5,
00

0
to

le
ss

th
an

$5
0,

00
0

0.
05

74
0.

01
16

**
*

0.
09

76
0.

01
91

**
*

0.
12

79
0.

01
86

**
*

0.
09

16
0.

01
87

**
*

$5
0,

00
0

to
le

ss
th

an
$7

5,
00

0
0.

05
96

0.
01

18
**

*
0.

12
36

0.
01

89
**

*
0.

16
90

0.
01

82
**

*
0.

11
53

0.
01

83
**

*
$7

5,
00

0
to

le
ss

th
an

$1
00

,0
00

0.
06

61
0.

01
28

**
*

0.
13

75
0.

01
99

**
*

0.
20

05
0.

01
93

**
*

0.
14

14
0.

01
92

**
*

$1
00

,0
00

to
le

ss
th

an
$1

50
,0

00
0.

04
96

0.
01

40
**

*
0.

15
92

0.
02

06
**

*
0.

21
76

0.
01

98
**

*
0.

16
40

0.
01

96
**

*
$1

50
,0

00
or

m
or

e
0.

04
51

0.
01

62
**

*
0.

17
44

0.
02

26
**

*
0.

25
32

0.
02

14
**

*
0.

21
24

0.
02

09
**

*
R

is
k-

to
le

ra
nc

e
le

ve
l

(l
ow

)
M

ed
iu

m
0.

00
87

0.
00

61
0.

11
62

0.
00

87
**

*
0.

03
89

0.
00

81
**

*
0.

05
67

0.
00

78
**

*
H

ig
h

0.
03

56
0.

00
78

**
*

0.
16

61
0.

01
19

**
*

0.
05

73
0.

01
10

**
*

0.
09

69
0.

01
04

**
*

Pe
rc

ei
ve

d
fin

an
ci

al
kn

ow
le

dg
e

(h
ig

h)
L

ow
�

0.
00

67
0.

01
04

�
0.

04
47

0.
01

89
**

�
0.

08
90

0.
01

65
**

*
�

0.
03

62
0.

01
65

**
M

ed
iu

m
�

0.
00

91
0.

00
75

�
0.

03
92

0.
01

22
**

*
�

0.
02

44
0.

01
11

**
�

0.
02

19
0.

01
08

**
Fi

na
nc

ia
l

fr
ag

ili
ty

0.
02

22
0.

00
19

**
*

�
0.

04
07

0.
00

30
**

*
0.

00
30

0.
00

28
�

0.
01

40
0.

00
26

**
*

N
um

be
r

of
ob

se
rv

at
io

ns
16

,5
88

16
,5

88
16

,5
88

16
,5

88

*S
ig

ni
fic

an
ce

at
10

%
le

ve
l;

**
si

gn
ifi

ca
nc

e
at

5%
le

ve
l;

**
*s

ig
ni

fic
an

ce
at

1%
le

ve
l.

428 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



risk tolerance are related positively to the demand for all types of financial advice and more
greatly affect the probability of seeking advice than do other variables. The finding for
income is consistent with the article’s expectation that those with relatively high incomes
might have a sufficient level of financial sophistication to seek financial advice in the areas
of savings/investment, mortgages/loans, insurance, and tax planning. The positive relation
between income and debt counseling was not expected, however. This relation could be
interpreted as the result of a tendency of those who see increases in income to accumulate
debt to fund a lifestyle that exceeds their income level.

Risk tolerance plays a significant role and demonstrates a strong positive effect on the
demand for all types of financial advice. However, the subjective assessment of risk tolerance
in the survey raises a question about the accuracy and reliability of this measure in reflecting
respondents’ actual risk tolerance and their understanding of its significance for their
financial investments.

A low perception of financial knowledge decreases the demand for all types of financial advice
except debt counseling. This finding does not support the expected negative relation between
perceived financial knowledge and the demand for financial advice and contradicts some findings
in prior research. This subjective assessment of financial knowledge might become a psycho-
logical barrier that decreases the demand for financial advice because respondents are not
confident in their ability to assess financial products and monitor agency relationships.

On the other hand, financial fragility, has been found to be related negatively to seeking
financial advice about savings/investment, insurance, and tax planning, and related positively to
seeking debt counseling. People who struggle with their expenses and are not able to save for
retirement might not have the luxury to think about investment or tax planning. Financial stress
would draw their attention away from long-term plans toward immediate short-term concerns.

The survey question about seeking the five types of financial advice refers to this behavior
in the past five years and does not necessarily indicate that respondents never seek profes-
sional financial advice or use alternative sources such as their social network. Furthermore,
because the survey focuses on individual responses, the household’s behavior may not be
observed accurately. If the spouse, for example, seeks financial advice, then the other spouse
may not indicate seeking such advice.

Understanding the demand for professional financial advice requires an examination of the
effect that salient and hidden fees have on people’s decisions to contract financial advisers.
In addition, future research has to examine the determinants of trust because respondents lack
the ability to assess service quality and evaluate outcomes. Financial advice is a mosaic of
services, and several factors influence the demand for different types of advice. The
similarity of payment-reward trade-off (i.e., fee payment for investment return) makes
financial advice a unique service arrangement because individuals’ mode of payment is that
exact commodity that they aim to preserve and grow to smooth their consumption power
over their life cycle.

Notes

1 The Assets & Opportunities Scorecard is a comprehensive look at Americans’ finan-
cial security based on 130 outcome and policy measures. The Scorecard enables states

429M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



to benchmark their outcomes and policies against other states in five areas: Financial
Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care, and
Education. http://assetsandopportunity.org/scorecard

2 Self-concealment refers to the psychological tendency to keep perceived negative or
intimate personal information secret. Older homeowners might conceal their financial
difficulty to protect their social status and perceived financial competency.

3 The survey’s questionnaire asks for detailed race and ethnicity information but the
dataset provides information regarding White and non-White only.

4 The subjective risk tolerance levels as per the 10-point scale are as follows:
● 1–3: low risk tolerance
● 4–7: medium risk tolerance
● 8–10: high risk tolerance

5 The financial knowledge levels as per the seven-point scale are as follows:
● 1–3: low financial knowledge
● 4: medium financial knowledge
● 5–7: high financial knowledge

6 The survey question for the dependent variables is: In the last five years, have you
asked for any advice from a financial professional about any of the following? Debt
counseling—savings or investment—taking out a mortgage or a loan—insurance of
any type—tax planning.

7 Wealth is a preferable factor in the decision to purchase financial advice, but is not
included in the 2012 NFCS. Therefore, income has been used to proxy wealth in the
model as the level of earning power might indicate a level of financial sophistication
and capability to seek professional financial advice.

8 Risk tolerance has been aggregated into three levels because the survey question
measures it on a scale from 1-very low to 10-very high and the responses are almost
evenly distributed across the scale.

9 Subjective assessment of financial knowledge has been aggregated into three levels
because the survey question measures it on a scale from 1 to 7.

10 The classification of younger respondents as those aged 18–44 follows the method-
ology in CFP 2015 Stress Awareness Month Survey Report.

References

Bajtelsmit, V. L., & Bernasek, A. (1996). Why do women invest differently than men? Journal of Financial
Counseling and Planning, 7, 1–10.

Brooks, J., Wiedrich, K., Sims, L., & Rice, S. (2015). Excluded From the Financial Mainstream: How the
Economic Recovery is Bypassing Millions of Americans. (available at http://assetsandopportunity.org/score
card)

Burton, D. (1995). Women and financial services: Some directions for future research. International Journal of
Bank Marketing, 13, 21–28.

Calcagno, R., & Monticone, C. (2014). Financial literacy and the demand for financial advice. Journal of Banking
and Finance, 50, 363–380.

430 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



Chang, M. (2005). With a little help from my friends (and my financial planner). Social Froces, 83, 1469–1497.
Collins, J. M. (2012). Financial advice: A substitute for financial literacy? Financial Services Review, 21,

307–322.
Cummings, B. F., & James, R. N. (2014). Determinants of Seeking Financial Advice Among Older Adults.

(available at SSRN 243468)
Donkers, B., & van Soest, A. (1999). Subjective measures of household preferences and financial decisions.

Journal of Economic Psychology, 20, 613–642.
Elmerick, S. A., Montalto, C. P., & Fox, J. J. (2002). Use of financial planners by U.S. households. Financial

Services Review, 11, 217.
Finke, M., Huston, S., & Winchester, D. (2011). Financial advice: Who pays. Journal of Financial Counseling

and Planning, 22, 18–26.
Fischer, R., & Gerhardt, R. (2007). Investment Mistakes of Individual Investors and the Impact of Financial

Advice. In 20th Australasian Finance & Banking Conference, Sydney, Australia.
Goldsmith, R. E., & Goldsmith, E. B. (2006). The effects of investment education on gender differences in

financial knowledge. Journal of Personal Finance, 5, 55–69.
Grable, J. E., & Joo, S. (1999). Financial help-seeking behavior: Theory and implications. Financial Counseling

and Planning, 10, 13–24.
Grable, J. E., & Joo, S. (2001). A further examination of financial help-seeking behavior. Financial Counseling

and Planning, 12, 55–74.
Hackethal, A., Haliassos, M., & Jappelli, T. (2012). Financial advisors: A case of babysitters? Journal of Banking

and Finance, 36, 509–524.
Hanna, S. (2011). The demand for financial planning services. Journal of Personal Finance, 10, 36–62.
Hanna, S., & Lindamood, S. (2010). Quantifying the economic benefits of personal financial planning. Financial

Services Review, 19, 111–127.
Hastings, J. S., & Mitchell, O. S. (2011). How Financial Literacy and Impatience Shape Retirement Wealth and

Investment Behaviors (No. w16740). National Bureau of Economic Research.
Heo, W., Grable, J. E., & Chatterjee, S. (2013). Life insurance consumption as a function of wealth change.

Financial Service Review, 22, 389–404.
Hira, T. K., & Mugenda, O. (2000). Gender differences in financial perceptions, behaviors and satisfaction. FPA

Journal, 200, 1–7.
Hung, A., Yoong, J., & Brown, E. (2012). Empowering women through financial awareness and education.

OECD Working Papers on Finance, Insurance and Private Pensions, (14), 1.
Inderst, R., & Ottaviani, M. (2000). Misselling through agents. The American Economic Review, 99, 883–908.
Inderst, R., & Ottaviani, M. (2012). Financial advice. Journal of Economic Literature, 50, 494–512.
Kramer, M. M. (2012). Financial Advice and Individual Investor Portfolio Performance. Financial Management,

41, 395–428.
Kramer, M. M. (2016). Financial literacy, confidence and financial advice seeking. Journal of Economic Behavior

& Organization, 131, 198–217.
Laibson, D., Gabaix, X., Driscoll, J., & Agarwal, S. (2007). The age of reason: Financial decisions over the

lifecycle. National Bureau of Economic Research Working Paper 13191.
Letkiewicz, J., Robinson, C., & Domian, D. (2016). Behavioral and wealth considerations for seeking profes-

sional financial planning help. Financial Services Review, 25, 105–126.
Levin, J., Milgrom, P., & Segal, I. (2004). Consumer Theory. (available at http://web.stanford.edu)
Loibl, C., & Hira, T. K. (2006). A workplace and gender-related perspective on financial planning information

sources and knowledge outcomes. Financial Services Review, 15, 21.
Lin, Q., & Lee, J. (2004). Consumers’ information search when making investment decisions. Financial Services

Review, 13, 319–332.
Lusardi, A. (2008). Financial Literacy: An Essential Tool for Informed Consumer Choice? (No. w14084).

National Bureau of Economic Research.
Lusardi, A. (2012). Numeracy, Financial Literacy, and Financial Decision-Making (No. w17821). National

Bureau of Economic Research.

431M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432



Lusardi, A., & Mitchell, O. (2014). The economic importance of financial literacy: Theory and evidence. Journal
of Economic Literature, 52, 5–44.

Lusardi, A., Mitchell, O., & Curto, V. (2010). Financial literacy among the young. Journal of Consumer Affairs,
44, 358–380.

Lusardi, A., & Mitchell, O. S. (2009). How Ordinary Consumers Make Complex Economic Decisions: Financial
Literacy and Retirement Readiness (No. w15350). National Bureau of Economic Research.

Lusardi, A., & Tufano, P. (2009). Debt Literacy, Financial Experiences, and Overindebtedness (No. w14808).
National Bureau of Economic Research.

Morris, G. A., & Meyer, R. L. (1993). Women and Financial Services in Developing Countries: A Review of the
Literature. (available at https://kb.osu.edu)

ORC. (2015). Stress Awareness Month Survey Report. (available at http://www.cfp.net)
Robb, C. A, Babiarz, P., & Woodyard, A. (2012). The demand for financial professionals’ advice: The role of

financial knowledge, satisfaction, and confidence. Financial Services Review, 21, 291–305.
Salter, J. R., Harness, N., & Chatterjee, S. (2010). Utilization of financial advisors by affluent retirees. Financial

Services Review, 19, 245–263.
Scott, J. K., & Finke, M. S. (2013). The demand for disability insurance. Financial Services Review, 22, 1–12.
Seay, M. C., Kim, K. T., & Heckman, S. J. (2016). Exploring the demand for retirement planning advice: The

role of financial literacy. Financial Services Review, 25, 331–350.
Simms, K. (2014). Investor profiles: Meaningful differences in women’s use of investment advice? Financial

Services Review, 23, 273–286.
Tang, N., & Lachance, M.-E. (2012). Financial advice: What about low income consumers? Journal of Personal

Finance, 11, 121–158.
VanDerhei, J., & Copeland, C. (2015). Retirement Confidence Survey. Retreived from http://www.ebri.org.
van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of

Financial Economics, 101, 449–472.
Winchester, D. D., & Huston, S. J. (2015). All financial advice for the middle class is not equal. Journal of

Consumer Policy, (April), 247–264.

432 M.H. Alyousif, C.M. Kalenkoski / Financial Services Review 26 (2017) 405–432