Source: Investor Education Fund
The generation gap is as wide as ever according to a recent study from the Investor Education Fund that examined how Canadians seek information about financial matters. The landmark research suggests the differences in learning habits, preferences and skills between young and old are significant, with older Canadians having acquired more knowledge and the younger crowd more adept at gathering current information from multiple sources and learning about changes in the financial marketplace.
"Our findings include a number of wake-up calls regarding the financial information that people want and how they want to get it," says Investor Education Fund president Tom Hamza. "It's not enough for organizations interested in raising the level of financial literacy in Canada to make good, unbiased information available. The Investor Education Fund conducted this research to precisely identify how Canadians, both young and old, are learning, and how they want to learn about financial matters.
The generation gap exists, but so does the potential for inter-generational learning
The two-phased study, conducted over the summer and fall of 2009, reveals Canadians 35+ have the financial knowledge and experience to help themselves and their adult children. But they are less willing or able than those under 35 to mine the ever-growing amount of financial information available on the Internet.
According to Hamza, the groups also have different ideas about what sources they consider trust-worthy. "Seven out of ten people surveyed who were 35 or older cite advisors as information sources, compared to just three out of ten in the 20-34 group," Hamza says. "In addition, 90% of the under 35's use the Internet as a source for financial information versus just 40% of people 35+."
The research also suggests older Canadians and their adult children recognize that when it comes to personal finance, they each have knowledge and skills to share. Surprisingly, parents are more receptive to getting information from their children than the children themselves imagine. While just over one-third of adult children think their parents would accept the advice or information they offer, nearly two-thirds of parents say they are receptive to listening to what their adult children have to say when it comes to personal finance.
"Parents have accumulated a lot of knowledge over the years," says Hamza. "Their Internet-savvy children are much more adept at finding the most up-to-dateate information and in using multiple sources to help them make financial decisions. So, there is tremendous potential for an intergenerational exchange of knowledge - one that will benefit both parents and their adult children".
What is certain from the research is that people of all ages need unbiased information to help them manage their personal financial affairs, and life-events trigger their search for the specific information they need at the time. However, how they search for it, what form they want it in, and what information they trust, differs between those under and over 35.
Hamza adds: "The question will be whether this young generation of Internet users and social media junkies change their financial research habits as they get older, or if their online approach will become the new norm across all age groups? If the latter is true, we'd better be ready for it."
Are advisors, educators, and financial literacy organizations ready for a major shift?
The study looked at the financial learning habits of Canadians in a variety of life stages using focus groups, personal interviews and online panels. It collected qualitative and quantitative data on how each segmented group learns about financial matters - what they find useful, what they look for and in what form.
The research shows that those under 35 are typically skeptical and want cross-validation of information, including the opinions of friends and family, to help them determine what information is trustworthy. However, the older you are, the more likely you are to seek "expert" advice from people and information sources you know and have learned to trust.
-- 71% of those 35 and older cite advisors as their source of information compared to 36% of the under 35 group; 90% of the under 35 group use the Internet as a source versus 40 % of those age 35 and older. (i)Note: All those surveyed are Internet users.
-- The younger group uses 60% more information sources (including friends and peer groups, websites, blogs and online forums) than older investors.
-- Barriers to acting on financial information they get are consistent across both age groups. They are: lack of time, lack of money, lack of the right information at the right time, and unforeseen events.