This study examines the relationship between financial knowledge, the use of a financial planner, and the financial planning horizon. Additionally, it investigates whether the use of a financial planner moderates the association between financial knowledge and the financial planning horizon. To distinguish the effect of financial planners from other professional advisory services, we compared their effect with that of brokers, bankers, accountants and lawyers.
For the empirical analysis, we utilized a pooled dataset from the 2016–2022 Survey of Consumer Finances (SCF), offering a comprehensive view across multiple time points. We performed an Ordinary Least Squares (OLS) regression analysis on the financial planning horizon variable and included interaction terms between the use of a financial planner and financial knowledge variables to estimate the moderating effect of financial planner usage.
We found positive associations between financial knowledge and the financial planning horizon, a finding consistent for both objective and subjective financial knowledge. We also found significant moderation effects of financial planner use on the associations. The moderating effect suggests that the use of financial planners strengthens the positive association between financial knowledge and individuals' financial planning horizons. Furthermore, the association between objective financial knowledge and planning horizons was stronger than that of subjective knowledge, highlighting the greater influence of actual knowledge in shaping long-term financial behavior. These results remained consistent with the main analyses, even after controlling for advice from other financial professionals.
This study is among the first to explore the associations between financial knowledge, advice-seeking and financial planning horizons. Our findings provide valuable insights for educators, practitioners and policymakers, emphasizing the role of financial knowledge and professional guidance in shaping individuals' long-term financial planning behaviors.
