Why and when does financial information affect retirement planning intentions and which consumers are more likely to act on them?

Hoffmann, Arvid O. I.; Plotkina, Daria

doi:10.1016/j.jbusres.2020.06.023

Cited by 29 publications

(34 citation statements)

References 105 publications

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“…Financial self-efficacy refers to individuals' perceived ability to succeed in managing their financial affairs (Lown, 2011). A growing literature indicates the importance of self-efficacy for effectively managing household finances, finding that it helps explain financial attitudes (Farrell et al, 2016), financial planning (Hoffmann and Plotkina, 2020), financial outcomes (Hoffmann and McNair, 2019) and financial satisfaction (Asebedo and Payne, 2019). Of particular importance in the financial vulnerability context is that individuals with higher self-efficacy are typically more successful in coping with stressful situations (Park and Folkman, 1997), and the more consumers believe in their financial capability, the more responsible their financial behavior (Hadar et al, 2013).…”

Section: Financial Self-efficacymentioning

confidence: 99%

The financial vulnerability trap: using latent transition analysis to explore the dynamics of consumers’ financial vulnerability over time

Hoffmann

McNair

Pallant

2021

EJM

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Purpose The purpose of the paper is to examine how psychological characteristics predict membership of and transitions between states of higher vs lower financial vulnerability – and vice versa – over time. Design/methodology/approach This research uses a dynamic latent class model (latent transition analysis) to explore the dynamics of consumers’ financial vulnerability over time using longitudinal data obtained by repeatedly administering a measure of financial vulnerability. Findings This research finds that consumers in a state of lower vulnerability are “fragile” in having a relatively high likelihood of moving to a state of higher vulnerability, whereas those in a state of higher vulnerability are “entrenched” in having a relatively low likelihood of moving to a state of lower vulnerability. This pattern of results is called the “financial vulnerability trap.” While financial self-efficacy explains state membership, the consideration of future consequences drives state transitions. Research limitations/implications Future research could follow consumers over a longer period and consider the role of alternative psychological characteristics besides those examined. Practical implications This research provides practitioners with actionable insights regarding the drivers of changes in consumers’ financial vulnerability across time, showing the value of financial self-efficacy and the consideration of future consequences when developing strategies to prevent consumers from sliding from a state of lower to higher financial vulnerability over time. Originality/value There is scant research on financial vulnerability. Further, prior research has not examined whether and how consumers’ psychological characteristics help explain their membership of and transitions between states of different levels of financial vulnerability over time.

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Section: Financial Self-efficacymentioning

confidence: 99%

The financial vulnerability trap: using latent transition analysis to explore the dynamics of consumers’ financial vulnerability over time

Hoffmann

McNair

Pallant

2021

EJM

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“…Thus, the joint effect of previous variables can predict 36% of the variance of financial management practices. The results of our work demonstrate that financial behaviour towards retirement is based not only on economic or educational factors, but also on emotional factors linked to personal ability to plan towards period that precedes death (Major et al, 2016) and attitudinal personal factors (Hoffmann & Plotkina, 2020).…”

Section: Discussionmentioning

confidence: 72%

A Model for Personal Financial Planning Towards Retirement

Herrador-Alcaide

Hernández-Solís

Topa

2020

Journal of Business Economics and Management

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One problem for sustainability of systems pensions is how people without specialized financial training could manage their resources and their actual personal intentions towards retirement. Research objective is to analyse the relationship among several factors that affect the behaviour towards retirement, the financial management practices and the financial resources, by carrying out a structural equation model (SEM) that was tested in Spanish workers sample in three phases. The influence of financial literacy, financial retirement objectives, optimism on retirement, tolerance to financial risk, and the commitment to financial planning at time 1, are analysed as explanatory variables of financial management practices at time 2. Financial resources for retirement at time 3 are explained by financial management practices. According to results, the model can predict the 36% of the variance of financial management practices and 53% of the variance of financial resources for retirement. Thus, the model can be used for checking of knowledge of the personal financial behaviour before retirement, what enables a better personal financial planning. It would be possible to apply a model based on self-assessment in order to implement a complementary financial planning that would allow to maintain the welfare during retirement.

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“…Considering the growing self‐responsibility for preparing for a financially secure future (Hoffmann and Plotkina, 2020) and the rising financial fragility of many individuals (Jappelli et al ., 2013), increasing our understanding of consumer financial decision making is of mounting importance. Financial markets and the decisions consumers must make regarding their personal financial management are increasingly complex.…”

Section: Discussionmentioning

confidence: 99%

Let your past define your future? How recalling successful financial experiences can increase beliefs of self‐efficacy in financial planning

Hoffmann

Plotkina

2021

Journal of Consumer Affairs

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Financial self‐efficacy, or the perceived ability to succeed in managing one's personal financial affairs, is fundamental to effective consumer financial decision making. However, little is known about how to improve consumers' financial self‐efficacy and which consumers are more or less responsive to potential policy interventions. We address these questions through an experimental study among US consumers. We find that asking consumers to recall and analyze successful (unsuccessful) experiences regarding the management of their personal finances is associated with higher (lower) financial self‐efficacy. We provide insight into the underlying process of this effect through moderation and mediation analyses. In particular, we show that the effect of a recall and analyze intervention utilizing a successful previous experience is more pronounced for consumers with a more optimistic personality. Finally, consumers who develop greater financial self‐efficacy as a result of our intervention display more self‐control, leading to a higher financial planning propensity and actual planning.

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Why and when does financial information affect retirement planning intentions and which consumers are more likely to act on them?

Cited by 29 publications

References 105 publications

The financial vulnerability trap: using latent transition analysis to explore the dynamics of consumers’ financial vulnerability over time

The financial vulnerability trap: using latent transition analysis to explore the dynamics of consumers’ financial vulnerability over time

A Model for Personal Financial Planning Towards Retirement

Let your past define your future? How recalling successful financial experiences can increase beliefs of self‐efficacy in financial planning

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