The financial literacy of employees and investors remains an ongoing concern. The common definition of literacy is “competence or knowledge in a specified area.” As organizations seek to evaluate financial literacy, it is important to focus on the competence factor in the current learning environment.
At a time when more information is available than ever, by many orders of magnitude, most consumers will simply wait to google a term when they “need to know” it. Unfortunately, many financial situations do not come with triggers to cue individuals that now they need to know something. Rather, consumers need to start with a functional understanding of key concepts so they can execute financial planning and investing.
In a self-funded study, our financial services research division presented US consumers aged 18+ with a list of commonly used financial and investment terms to gauge a public level of understanding. Respondents self-evaluated how thoroughly they understand the given terms. For some of the terms, a working and ongoing understanding of the concept is important to routine saving and investing.