How are behavioural biases and financial literacy related in their influence on financial help-seeking behaviour? A systematic review

Abstract

The aim of this review is to investigate the collective influence that one’s behavioural biases and financial literacy have on one’s extent of seeking financial advice. Existing literature has discussed at great lengths about the effect that they individually have on one’s likelihood to seek financial advice, some reasons being the overpowering effect of biases on humans. This meta-analysis has shown that it is mostly inevitable for one to experience behavioural biases since our natural tendencies gravitate towards that. However, this study has also found the relevance of using one’s financial knowledge and technical competency to assess his ability to curb the impact of biases. Hence, the findings of this study serve to contribute practical knowledge for individuals to make informed financial choices. Furthermore, this fosters a deeper appreciation among financial professionals for the internal processes that occur before the decision to seek financial advice. This encourages a greater sense of collaboration between professionals and consumers towards major financial decisions, such as investment portfolios.