Belief in success key to decision to seek financial advice

By Andrew Rickard | December 08 2015 11:51AM

Researchers at York University in Toronto have found that people who believe they can succeed are more likely to seek out the help of a professional financial advisor.

It is not surprising that people with more wealth and income are more inclined to see an advisor, but how much of a role does financial stress play in the decision? In Self-Efficacy, Financial Stress, and the Decision to Seek Professional Financial Planning Help, authors Jodi Letkiewicz, Chris Robinson, Dale Domian, and Natallia Uborceva found that stress alone is not enough to prompt someone to see an advisor. Instead, it is self-efficacy (i.e., the belief in one’s own ability to succeed) that is a consistent and strong predictor of help-seeking behavior.

The research, which was funded by the Financial Planning Foundation, looked at data from a three-year longitudinal study of almost 15,000 Canadians and found that the more overall confidence a person has in their ability to undertake and successfully complete an activity like financial planning, the more likely it is that they will take action.

Financial stress without a belief in the ability to succeed actually tended to decrease the likelihood that someone would see an advisor. However, if individuals do have confidence in their ability to succeed, the study found that they will be even more likely to seek help when they are experiencing elevated levels of financial stress.

The authors suggest that the way people experience and interpret emotional states can determine self-efficacy beliefs; those who are extremely nervous or anxious tend to doubt themselves and may have little confidence in their ability to succeed.

"Constructive feedback is important to building and maintaining a sense of self-efficacy," concludes the study. "This is important for financial advisors to keep in mind when working with clients and for public workers dealing with a financially illiterate population."