The truth will set you free: the perception of South African financial advisors regarding clients' truthfulness when sharing information

There is a need for better financial advice. Financial advisors are not able to give accurate financial advice if clients are not completely truthful. This paper aims to analyse the perceptions of financial advisors regarding client truthfulness when disclosing sensitive financial information. Providing sensitive information, for example income, expenses, level of debt, and medical information, could create feelings of discomfort or embarrassment for both the financial advisor and client. A total of 364 useable questionnaires were returned via an online link sent through a community network email to all members of the industry standard-setting organisation in South Africa. Financial advisors perceive their clients to be more untruthful about sensitive topics such as debt, expenses, and knowledge about their finances. Debt, medical history, and their knowledge about their finances were found to be indicators of embarrassment. The financial advisors indicated their optimism regarding clients' untruthfulness, which is that they need time to build the trust relationship and will subsequently open up. This specific result suggests that the advisors are open to building long-term relationships with clients that can last several years.

     

Arguments for and against financial literacy education: where to go from here?

Currently, everyone is brandishing financial literacy education as the answer to the global personal financial crisis. However, there are a few advocates against financial literacy education. There is contention whether financial literacy education actually leads to effective financial behaviours. The purpose of this theoretical article is to state the various arguments for and against financial literacy education and suggest possible guidelines for interventions by governments and institutions in an effort to increase financial well‐being. There are no easy answers to this complex problem and financial illiteracy should not be presented as the sole culprit. Basic financial literacy education is needed to manage day‐to‐day finances; however, specialist areas such as investments and retirement planning should be left to professionals. It is suggested that financial literacy education should focus not only on cognitive factors but also on non‐cognitive and affective factors that might override rational decision making.