Financial Literacy, Confidence and Financial Advice Seeking

We find that people with higher confidence in their own financial literacy are less likely to seek financial advice, but no relation between objective measures of literacy and advice seeking. The negative association between confidence and advice seeking is more pronounced among wealthy households. We base these findings on the analysis of two rich data sources from the Netherlands: the DNB Household survey and a sample of investors from a large Dutch retail bank. Our results imply that policy makers should be careful to put financial advice forward as a mechanism to curb the ill effects of low financial literacy and that steering people towards more accurate self-assessments seems a more promising route.