Assessing Retirement Income Literacy Among Consumers and Financial Advisors: Validating a Scale and Examining Professional Designations
Year: 2025
Type: article
Study design: Observational Study
Abstract: ABSTRACT This study provides the first formal psychometric validation of the Retirement Income Literacy Scale (RILS) and examines the relationship between professional designations and specialized knowledge among financial advisors. Using a two‐study design, we first validate the 38‐item RILS with 3745 American consumers aged 50 to 75, demonstrating strong internal consistency and confirming a unidimensional factor structure through exploratory and confirmatory factor analyses. The validated scale exhibits good model fit and adequate construct validity. In the second study, we assess retirement income literacy among 906 financial professionals using the validated RILS. Results reveal that financial advisors with professional designations score significantly higher than those without designations, representing a practically meaningful 9.37‐point difference. LASSO regression analysis identifies the Certified Financial Planner (CFP) credential as the strongest predictor among professional designations. A curvilinear relationship emerges between the number of designations held and RILS scores, indicating diminishing returns to multiple credentials specifically for retirement income literacy knowledge. These findings provide empirical support for both Signaling Theory and Human Capital Theory in the financial planning context, demonstrating that professional designations function as meaningful indicators of specialized knowledge. The study contributes a validated assessment tool for retirement income literacy research and offers evidence‐based insights for professional development in financial planning, with implications for advisor credentialing, consumer choice, and industry standards. FPR classification codes:I.5. I.7.
Source: Financial Planning Review
DOI: 10.1002/cfp2.70015
Authors: Eric T. Ludwig, Chet R. Bennetts
Institution: American College of Financial Services
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,200
OpenAlex ID: W4413807587