Information is literally at our fingertips these days. If we don’t know who won the World Series in 1995 (hint: Atlanta Braves), how to make lasagna or what type of medical condition we might have, we just do a quick internet search on our computers, tablets or phones. However, there are plenty of subjects that cannot be understood with a quick Google search.
Complex topics like financial planning involve incredibly complicated issues that leave many people scratching their heads and making some misguided choices. In fact, a recent study shows that most people in the country have a low level of financial understanding.
The study was conducted by Finra Investment Education Foundation and looked at online quiz responses from 25,000 people. The results suggested that most people don’t fully understand things like bonds, negative interest rates and compound interest.
It should also be noted that the low scores recorded from the online quiz sharply contradict the fact that 76 percent of respondents scored themselves as having a very high financial knowledge rating.
So what does this mean in terms of estate planning? Well, there are a couple things to take away from this recent study.
To begin with, many people don’t have a sophisticated understanding of financial planning. This can make it very difficult to plan ahead in the context of an estate plan. If you don’t know what you have, what you owe and how you can save yourself some money, you may not be creating the best plan for you or your loved ones in the future.
Further, this study could encourage people to rethink the person tasked with various financial duties as part of an estate plan. Rather than granting fiduciary duties to a stranger or your children, you may want to consider assigning them to someone with proven or professional financial planning experience.
Planning for the future financially can be an extraordinary challenge for most people. Too many people dig their heads in the sand or continue making decisions without guidance, which can have a devastating impact on things like estate plans. Rather than do this, you can take control of the situation by consulting legal and financial professionals who can help you make informed decisions that protect your wishes.