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- Title
Alternatives to Financial Literacy: Helping Pension Participants Invest.
- Authors
Turner, John A.
- Abstract
It is well-documented that many people have low levels of financial literacy. The solution to this problem is less clear. One initial response has been to develop education programs that attempt to improve financial literacy. However, this approach places the burden on pension participants and their employers. This article argues that basic financial literacy is desirable but that it is unreasonable to expect pension participants to construct well-diversified portfolios that are aligned with their levels of risk aversion. The article offers three alternative approaches for pension participants: (1) simplify investment products in financial markets to make it easier to invest in a diversified portfolio that meets individualized needs, (2) simplify pension plans to make it easier for participants to enroll, choose contribution levels and select a portfolio, and (3) improve the quality and reduce the cost of financial advice through innovation, such as robo-advisors.
- Publication
Benefits Quarterly, 2021, Vol 37, Issue 3, p32
- ISSN
8756-1263
- Publication type
Academic Journal