Participants increasingly seek other sources when looking for financial guidance, finds research from Transamerica and the MIT AgeLab.
The whitepaper, “Better Together: Improving Financial Wellness in America,” fielded responses from middle-income Americans on their trusted sources when seeking financial guidance. It reports that while respondents say they trust professionals and banks the most when receiving financial guidance, many choose to browse online or seek advice from family and friends for their answers instead, even if they don’t necessarily rely on these options.
The research also broke down participants’ preferences based on their different factors, from age to race. According to the findings, older participants were skeptical with all sources of financial information and advice, “with the greatest gaps between younger and older adults around online sources [social media and online communities], family and friends, and financial journalists.”
Latino and Hispanic respondents were likelier to rely on social media sources compared to white respondents, while African American and Black respondents had a much higher level of trust in financial influencers compared to Asian and Asian American respondents.
Transamerica and MIT AgeLab’s report also cites research from the World Economic Forum, which in 2024 reported a 2% drop in financial literacy in the U.S., at around 50% of the population.
Middle-income Americans reported a relatively high degree of financial confidence, with over half (51.9%) describing themselves as “very or extremely confident” in making knowledgeable financial decisions. Respondents were especially confident in their ability to access advice when needed (69.8%), make complex financial decisions (51.5%), make good financial decisions that were new to them (55.8%), and recognize a good financial investment (53.2%).
However, confidence levels dipped when it came to understanding details. When asked whether they understood financial information, 38% of the sample disagreed that they struggled, while 35.2% said they do have a tough time understanding financial material.
Specifically, researchers asked respondents the following questions:
- Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much would you have?
- Imagine that the interest rate on your savings account is 1% a year and inflation is 2% a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
- If interest rates rise, what will typically happen to bond prices?
- True or False: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.
- True or False: Buying a single company’s stock usually provides a safer return than a stock mutual fund.
Just over half (51.3%) of respondents answered four out of five questions correctly, and the median number of questions answered right was 3.31.
The research surveyed 1,326 participants with household incomes between $50,000 and $200,000.