Americans seem to put a lot of faith in their financial literacy, despite the fact that only around one out of 20 scored in the top bracket on a financial quiz, according to a recent report from the research firm Raddon.
Forty-four percent of Americans believe they’re “extremely” or “very” financially literate, according to a survey of 1,200 U.S. adults 18 and over conducted in the fall of 2017 by Raddon, which is part of Fiserv. But not even half were able to pass a financial quiz, and just 6% were able to get a score of 90 or above on the company’s quiz, Raddon found.
The lack of financial knowledge is understandable, given the fact that 94% of Americans have never been part of a financial literacy program, as Raddon found. Fifty-one percent of respondents believe they only need to understand financial concepts and products on a need-to-know basis or as part of learning about a specific product, according to the survey.
Financial institutions of all stripes may have a role to play: many survey respondents believe that such a program would be extremely or very valuable, according to the survey.
“A majority of customers who participate in a financial education program find value, and in a market that is intensely experience- and relationship-driven, providing financial education can help institutions to stand out and build depth with their customers,” David Irwin, president of Raddon, says in a statement accompanying the survey. “Closing the gap between customer perceptions of their own financial literacy and reality will help them develop the skills to build financial health.”
Raddon found a correlation between respondents who said they’ve taken financial literacy courses and higher scores on its financial quiz. Meanwhile, financial advisors may have a particularly open reception from younger investors. While 38% of the survey respondents overall believe that financial education in areas such as money management, investing and retirement planning would be “extremely” or “very” valuable, that ratio rises to 55% among millennials, Raddon found.