Senior corporate executives tend to have a global outlook. How does a wider world view contribute to financial literacy?
When asked who they’d like to see run the nation – a CEO, politician, military leader or diplomat – most Millionaires would pick an executive with a background in corporate finance, according to a Millionaire Corner survey conducted in July. Why a CEO?
Among other traits, a CEO must be highly intelligent, according to Steve Tobak, consultant and former high-tech executive himself. “Forget old notions of book smart versus street smart. You have to be both,” he wrote in an article for CBS Money Watch, explaining that a CEO needs to “rapidly digest and analyze information, reason, solve complex problems, and make critical decisions.”
The abilities also explain the high level of financial literacy reported by senior corporate executives in ongoing Millionaire Corner research. Executives express a high degree of sensitivity to both domestic and global economic issues, and tend to have a plan in place to deal with any financial fallout.
“As a group, senior corporate executives demonstrate a sophisticated understanding of the current economic environment and how it impacts their personal financial situation,” said Catherine McBreen, Millionaire Corner president. “Their broader world view and high degree of financial literacy appears to bolster their investor confidence and bring them a certain peace of mind.”
Eighty percent of executives surveyed by Millionaire Corner in October indicated they understood the issues surrounding the U.S. fiscal cliff. In comparison, 56 percent of all the 1,355 investors surveyed felt they understood. The fiscal cliff refers to the economic crisis that could take place at the end of the 2012 if Congress allows the Bush-era tax cuts to expire and, at the same time, lets cuts in federal spending go ahead as scheduled.
Corporate leaders are not only relatively well informed about the fiscal cliff, but they also appear less worried than other investors about its impact. More than 22 percent of executives said they felt Congress would decide a solution to the fiscal cliff, compared to 17 percent of all survey participants.
Though senior corporate executives express the highest level of confidence that Congress will resolve the issues surrounding the fiscal cliff, they are also more likely than investors as a whole to have a financial plan in place to deal with the crisis.
How are senior corporate executives likely to respond to the fiscal cliff? Half say they would invest more in cash, 20 percent would invest more in gold, 16 percent would invest more in bonds, 12 percent would invest more in equities and 10 percent would invest more in international products.
How do senior corporate executives build financial literacy? Our research shows that, among other things, executives are socially media savvy, and are heavy consumers of television coverage, newspaper reports and Internet sources.