Financial literacy and financial advice seeking for retirement investment choice

Abstract

The research investigates the effects of the degree of financial literacy on financial advice seeking for retirement investment choice as well as assesses the level of financial literacy of Vietnamese employees. An empirical research was conducted by examining 314 individuals who are currently at working stage. This current work also contributes to the present literature by exploring whether the relationship between financial literacy and seeking out advice is a substitute or complementary relationship. The estimation techniques applied in this resaerch are statistics descriptive analysis and two-stage least squares (2SLS) regression. The results of our statistics descriptive analysis indicated that Vietnamese employees have a moderate level of basic and advanced financial literacy. After addressing the endogenous problem by running a two-stage least squares (2SLS) regression, results show that both basic financial knowledge and advanced financial knowledge are positively correlated with financial advice seeking for retirement investment choice. This result also supports the evidence that this relationship may be considered a complementary one. Hence it is recommended that policy makers should concede that along with financial literacy, financial advice ought to be perceived as a complementary mechanism to assist individuals to make informed retirement investment choices.