2020 Academic Research Colloquium

Papers and Posters

The Colloquium featured paper presentations and poster sessions focused on topics that relate or indirectly relate to financial planning practice and or the financial planning body of knowledge:

• Big Data / AI / Robo-advising Household Finance
• Behavioral Economics Insurance
• Behavioral Finance Investments 
• Communication and Counseling Marriage and Family Therapy 
• Estate Planning Psychology
• Financial Planner Education / Pedagogy Public Policy 
• Financial Therapy Retirement Planning 
• Financial Sociology Taxation 
• Healthcare 
• Household Finance 
• Insurance
• Investments
• Marriage and Family Therapy 
• Psychology 
• Public Policy 
• Retirement Planning 
• Taxation

Access the Call for Papers and Posters for additional information

2020 Academic Research Colloquium for Financial Planning and Related Disciplines

List of Accepted Paper Presentations

Does working with a financial advisor reduce financial anxiety and increase investment confidence
Matthew Somer
Kansas State University

The purpose of this paper is to investigate whether working with an advisor decreases financial anxiety and increases investment confidence. Using data collected from 1,005 U.S. households, we found no evidence that working with an advisor impacts anxiety; however, strong evidence was found that investor confidence increases. Further, couples that make decisions jointly were found to have significantly more investment confidence than couples where one partner makes decisions alone. These findings highlight an additional benefit advisors provide to their clients, and a compelling reason for couples to consider making financial decisions jointly.

Rating a Robo-Rater
David Nanigian, CFP®
California State University, Fullerton

Since 2011, Morningstar has issued Morningstar Analyst Ratings on many of the largest mutual funds in the USA. In June 2017, Morningstar launched the Morningstar Quantitative Rating™ to provide a forward-looking rating on all mutual funds. Morningstar uses a “robo-rater” machine learning model to assign Morningstar Quantitative Ratings. However, the “robo-rater” cannot utilize the complete set of information available to Morningstar’s analyst as it cannot process “soft information”. The purpose of this study is to evaluate if and how this “robo-rater” is conducive to mutual fund selection. I find that the only value of the “robo-rater” is in its assessment of mutual fund expenses and that its inability to process “soft information” makes the Morningstar Quantitative Rating™ much less useful than the Morningstar Analyst Rating™.

Removing the Fine Print: Standardization, Disclosure, and Consumer Loan Outcomes
Sheisha Kulkarni
University of California – Berkeley
Universidad de Los Andes, Pontifcia Universidad Catolica de Chile

Consumers face a choice when evaluating financial contracts: study the fine print and incur a cognitive cost or ignore it and risk costly surprises in future. We use a pair of policy changes in Chile to contrast two measures to protect consumers from fine print: the first improves disclosure and the second standardizes and regulates contract features. With administrative data from the banking regulator on consumer loans, we use a regression discontinuity design to estimate the casual effects of these regimes. Consumers offered standardized contracts experienced 40% (14.4 percentage points) less delinquency. Using a difference-differences design, we find that sophisticated borrowers are helped most by increased disclosure, while unsophisticated borrowers benefits more from product standardization. Additionally, we show that only sophisticated borrowers—who benefit from the informational disclosure treatment—leave less “money on the table.” We contextualize these results in a stylized model that predicts that financially sophisticated will benefit from disclosure while unsophisticated borrowers will benefit from standardization based on differentials in the cost of studying.

A Structural Model of Mental Accounting
Nick Pretnar
Carnegie Mellon University

We construct and estimate a formal economic model of mental accounting where utility maximizing consumers facing rationality constraints infrequently update their desired expenditure budgets for different categories of consumption. We use latent Bayesian inference to estimate the model on a unique dataset of consumer-level weekly consumption expenditure in order to infer mental accounting decision variables. Our formulation reconciles the variability of observed high-frequency consumption expenditure patterns. We find that consumers optimally re-evaluate only about 25% to 50% of their expenditure budgets each period, providing empirical evidence that consumers regulate their expenditure behavior with mental accounting heuristics. Compared to two separate models where consumers face no cognition frictions or engage in full, sticky mental accounting, the model with both consumer- and time-dependent heterogeneous rationality constraints fits the data best. Counterfactually, we find that implementing policies which encourage consumers to stick with weekly expenditure budgets leads to, on average, higher savings rates and welfare improvements.

Generous to a Fault: The Effect of Generosity of Employers Retirement Plan Contributions on Leakage from Cashing Out at Job Separation
Muxin Zhai
Texas State University

Pre-retirement leakage is any form of withdrawal from 401(k) balances before the age of 59.5. The US government imposes a 10% tax penalty on leakage to discourage it. We investigate the impact of employer matching contributions on leakage at job termination. Adding a matching contribution or increasing the generosity of the match is aimed to incentivize participation and increase employees’ contribution rates. However, the matching scheme may also induce people to frame retirement assets differently according to the contribution proportion between themselves and their employers. We suggest that people are likely to view assets with a larger proportion contributed by themselves as “untouchable” retirement savings and those with a larger proportion contributed by employers as “fungible rainy day” fund. As a result, a generous matching plan aimed at increasing participation and contribution rates may induce unintended consequences of a higher leakage rate at job termination. Using a unique data set with 597,980 employees covered by 29 retirement plans, we find that 38% employees engaged in leakage at job termination and that those who leak a part of their retirement savings out at the time of job separation eventually drain the entire account. The likelihood of this cashout path is affected by the proportion of 401(k) assets contributed by an employer through the employer match. A 50% increase in matching rate would be associated with 14.5% (or 4.9 percentage points) increase in leakage probability at job termination. However, there would be 3.5% (or 1.2 percentage points) reduction in leakage probability if employees ignore the extra incentive for leakage generated by the composition effect.

Estimating Willingness-to-Pay for Financial Planning Services
Wookjae Heo
South Dakota State University

The purpose of this study is to use a survey to estimate consumers’ willingness to pay (WTP) for financial planning services. The WTP was measured using Double Bounded Dichotomous Choice (DBDC) that presumes how much a consumer is willing to pay based on the contingent valuation provided. The findings of this study show whether or not a consumer’s WTP is well-matched with the market price of financial planning services. By estimating the WTP, this study contributes to the literature. These findings suggest a different level of perceived importance and a need for financial planning services between the total sample and the subsample. Thus, financial planners can note the factors related to the marginal effects of the WTP to identify the underserved segments of their clients and then serve them better. These findings may have implications about the need for financial planning services at more diverse price levels if a price gap between the markets and consumers is found.

Bigger is Better: Defined Contribution Menu Choices with Plan Defaults
Michael Finke, CFP®
The American College of Financial Services

Prior studies of core menu size find that fewer available core menu investments improve employee participation rates by reducing choice overload. Today’s plans often opt employees into high-quality investment defaults. Increasing the number of investments on a core menu may encourage less experienced investors to remain in the default, and may benefit participants who prefer to customize their own portfolio. Using data from over 500 defined contribution (DC) plans with over half a million participants where core menus vary between approximately 10 and 30 investment options, we find that acceptance of the default investment option increases by approximately 1% for each additional fund in the core menu. Portfolio efficiency increases among participants self-directing their accounts in plans with larger core menus because the number of average holdings increases with plan size, resulting in more diversified portfolios. Our results provide evidence that small plan menus encourage participants to move away from the default, and fewer investment options result in less efficient portfolios for self-directed participants.

The Relationship Between the Ownership of Insurance Products And Retirement Satisfaction
Hossein Salehi, CFP®
California Lutheran University

Millennials’ Adoption of PFM Technology and Subsequent Financial Behavior
Brian Walsh, CFP®
Kansas State University

This paper leverages the Technology Acceptance Model to analyze the factors that influence personal financial management technology (PFM) adoption among millennials and extends the analysis to understand how PFM adoption influences subsequent financial behavior. Data from the 2018 National Financial Capability Study was used for this analysis. Evidence suggests that millennials engaging in digital side hustles, such as Uber or Lyft, are significantly more likely to adopt PFM technology. Individuals experiencing higher financial pressure or exhibiting higher financial confidence are more likely to adopt PFM technology. After extending the analysis to include subsequent financial behavior, heavy adopters of PFM technology are more likely to own an emergency fund, payoff their credit card in full every month, own a retirement account, own an investment account, save for retirement, and own a will. Surprisingly, heavy adopters of PFM are also more likely to spend more than they earn and experience overdrafts.

Husbands Remain the More Financially Knowledgeable Spouse in Wealthy Households
Sherman Hanna
Ohio State University

This study examines the question of who is considered the financially more knowledgeable spouse among mixed-sex married couple households, using being the respondent as the indicator of being more financially knowledgeable. The husband was the respondent in 56% of mixed-sex married couple households in 2016, which was a higher proportion than in 1992. In 90% of households in the top 1% of net worth, the husband was the respondent, a striking result given the progress women have made in education and other aspects of society. Our logistic regression on whether the husband or wife was the respondent showed a strong effect of the spouse with more education being the respondent, consistent with respondent status indicating greater financial knowledge. The likelihood of the husband being more knowledgeable increased with net worth and with husband’s education. We explore issues related to this extreme disparity in assessment of relative financial knowledge for wealthy households.

Revisiting Gender and Investor Overconfidence
Dominik Piehlmaier
University of Wisconsin-Madison

This paper assesses the impact of gender on investor overconfidence by considering the constituents of decision-making within this process. It differentiates between consumers who make their investment decisions independent of others and those who seek outside advice. Within the group of isolated decision-makers, women appear to be at least as overconfident in their financial knowledge as men. This implication holds across four independent datasets with more than 9,000 consumers. The causality of this claim is supported by a simple randomized controlled trial. The finding can consolidate previously reported conflicting evidence regarding the impact of gender on the cognitive bias. In addition, the paper provides a coherent and detailed account of one of the most commonly used demographic variables in empirical marketing research and its impact on consumer financial decision-making. It encourages community discussion about the role of femininity and masculinity in excessive confidence in consumer behavior. Lastly, the paper offers a feasible alternative to gender as a proxy for investor overconfidence and holds important implications for employment brand managers and marketers in finance.

Using Behavioral Prompts to Improve Saving and Investing Decisions
Vickie Bajtelsmit
Colorado State University

The objective of this research is to enhance understanding of the behavioral biases that may adversely impact younger generations’ financial outcomes. Research based on national survey data suggests that differences in overconfidence, financial literacy, risk preferences, and present bias all impact saving and investment decisions. In an incentivized laboratory experiment, subjects make investment and asset allocation decisions over a meaningful time horizon. We test the efficacy of alternative behavioral prompts to motivate optimal saving decisions. Specifically, we consider the effects of invoking the future self, setting goals in advance, and provision of advice. A major contribution of this research is that we assess the impact of various interventions while controlling for idiosyncratic time preferences, risk tolerance, overconfidence and financial literacy.

Development and Validation of a Scale to Measure Consumer Banking Competence
Ivo Gyurovski
Hampden-Sydney College

Americans are struggling with personal finance management. This manuscript documents the development and validation of a Consumer Banking Competence Scale (CBC), conceptualized as exercising self-control in the management of personal finance. Lower scores indicate poor finance management, and high scores indicate prudent finance management. Indices of internal consistency, test-retest reliability, construct, and criterion validity demonstrate that the CBC scale performs well as a trait measure. Analyses distinguished the CBC from related constructs. Significant and positive correlations were established among the CBC measure, FICO credit scores, general income, income from investments, and income from capital gains. Focusing on two applications, the CBC fully mediated the relationships between financial literacy with income and creditworthiness. Second, being a more competent consumer of banking products was associated with unique contributions to better physical health, lower BMI, more sleep per night, better healthcare practices, and less perceived stress, above and beyond what we may expect from predicting these variables with socio-economic status, self-control, and time discounting. The findings are discussed in the context of efforts for financial education and the benefits of personal finance management on health.

Left Behind: Partisan Identity and Wealth Inequality
Da Ke
University of South Carolina

Using longitudinal household data, I document that Democrats are less likely than Republicans to invest in the stock market under Democratic presidencies, precisely when stock market return is substantially higher. This pattern contains even for college-educated and financially sophisticated individuals, and is best explained by their partisan identity. Moreover, the gap in stock market participation between Democrats and Republicans accounts for about half of their discrepancy in wealth accumulation over presidential cycles. A profound implication of these findings is that rising political polarization in the U.S. may be fueling wealth inequality.

Factors Associated with Having Used a Robo-Advisor
Timothy Todd
Liberty University

This study investigates the characteristics of investors that have used an automated investment solution (e.g., a robo-advisor). We use combined data from the 2015 National Financial Capability Survey and the follow-up 2015 Investor Survey to investigate the use of robo-advisors among 1,600 individuals with non-retirement investment accounts. Multivariate results indicate robo-advisor use is associated with being younger, having middle to low incomes, and having lower objective investment knowledge. This study provides important insight for policymakers, financial practitioners, and proprietors of robo-advisors and other fintech products.

Advertising Exposure and Investor Attention: Estimates from Super Bowl Commercials
Gabriel Buchbinder
Princeton University

Product advertising captures the attention not only of consumers but also of investors. Constructing a new measure of local investment interest on stocks from Google searches and using the Super Bowl as an experiment, we study the effects of advertising expenses on investor attention. We find that the post-game Monday attention of investors in areas with high viewership increases significantly for both local and non-local companies that air commercials. Non-local firms with high advertising exposure in a region attract more interest than local firms with low exposure, suggesting that advertising has a stronger impact on investor attention than local bias.

A New Measure of Investor Risk Aversion
John Grable, CFP®
University of Georgia

This paper introduces a new measure of investor risk aversion. The single-item question combines elements from traditional constant relative risk aversion estimation procedures with aspects from propensity measurement techniques. Based on pilot test data, scores from the new test were found to correlate with others measures of risk aversion. Additionally, in line with the risk-assessment literature, men were found to exhibit less risk aversion than women. The simplicity and intuitive nature of the question make this a potentially valuable addition to an investor’s and/or financial planner’s toolkit. Based on these initial results and conclusions, a larger survey of investors is in process. Results from the data collection process will be presented at the conference.

The Effect of Mortality Salience on Asset Decumulation Decisions
Yi Liu
Texas Tech University

Standard life-cycle economic theory suggests that people should spend down assets during retirement at a rate maximizing their lifetime consumption. However, actual retiree behavior exhibits asset decumulation at much slower rates, not at all, or even continued accumulation. One potential factor is that decumulation requires personal mortality estimations. Previous research finds that personal mortality reminders (1) are aversive and (2) increase focus on impacting those who will survive. Correspondingly, recent research has found that (1) annuity purchases are reduced due to associated personal mortality reminders and (2) mortality reminders increase relative preference for annuities that pay less income but provide a greater bequest provision. This study investigates whether mortality salience will also influence the broader issue of an individual’s asset decumulation decisions in retirement. Using a randomly assigned experimental test, we find that increasing mortality salience increases the desire to retain assets in retirement, reducing the preferred spending rates in retirement. Understanding the role of mortality salience on decisions about asset decumulation in retirement can be beneficial to academic researchers and financial planners

Does subjective cognitive functioning help to describe the financial behavior of older adults?
Su Hyun Shin
University of Utah

This study investigates the impact of subjective cognitive functioning on financial asset holdings and allocation of older adults. The results show that higher subjective cognitive functioning affects the amount and share of some assets held by them, but this effect disappears when objective cognitive functioning is considered. While subjective cognitive functioning cannot predict asset holdings and allocation, higher objective cognitive functioning leads to a greater share in IRAs and a smaller share in cash-equivalent. These results are robust after controlling for risk aversion and a planning horizon and after using a different instrumental variables approach.

Consumer Perceptions of Financial Advisory Titles and Implications for Title Regulation
Derek Tharp
University of Southern Maine

Many professionals in the financial services industry refer to themselves as financial advisers despite tremendous variation in business practices, compensation methods, and duties to act in the best interest of their clients. As a result, both the Securities and Exchange Commission (SEC) and state securities regulators have recently considered title regulation aimed at promoting consumer clarity. However, there is little empirical evidence to inform how consumers actually perceive the use of such titles. This study examines consumer perceptions via a survey of US consumers conducted using Amazon’s Mechanical Turk (n = 665). Findings suggest that consumers perceive common industry titles as different from one another in a manner that is consistent with the differentiation of advice professions (e.g., financial adviser, financial planner, financial consultant, investment consultant, investment adviser) from sales professions (e.g., investment salesperson, stockbroker, life insurance agent). Implications regarding the potential efficacy of proposed regulatory frameworks are discussed.

Racial Demographic Factors Associated with Financial Planner Use
Miranda Reiter
Kansas State University

Financial help-seeking behavior and life satisfaction among the U.S. elderly: The Roles of Personality, Cognitive Ability, and Risk Tolerance
Lu Fan, CFP®
University of Missouri

This paper used a nationally representative longitudinal dataset to examine the roles of personality, cognitive ability, and risk tolerance when seeking financial advice among the elderly households. Additionally, this paper also examined whether professional financial advice is associated with life satisfaction and quality of life in old age. The results confirm the key research hypotheses of this study and indicate that extroversion is negatively associated with seeking professional financial advice, whereas cognitive ability is positively associated with seeking financial advice. Additionally, receiving professional financial advice is positively associated with life satisfaction among the elderly households. The policy implications that emerged from the key findings of this study have been discussed. Implications for financial planners and counselors are also included.

Financial Aliteracy: Measurement and Connection to Financial Behaviors and Economic Pressure
Isha Chawla
Iowa State University

Based on results from the 2015 National Financial Capability Study (NFCS), an increasing number of families in the United States are experiencing acute economic pressure which has been linked to negative family outcomes. Previous research has identified that overconfident household financial decision makers were more likely to exhibit poor financial decisions, however, the connection between financial self-efficacy, family economic pressure, and financial behavior needs further exploration. The purpose of this study is to add to the work in financial confidence and financial self-efficacy through examination of both over and under estimation of personal financial capability and its link to family economic pressure and financial behavior. This study employs the 2015 National Financial Capability Study (NFCS), a nationally representative sample of 27,564 Americans, to measure household decision-maker confidence levels and identify links to measured family economic pressure and financial behavior. The study falls under the framework of the Family Stress Model (FSM). Overall findings suggest that individuals with less confidence in their own level of financial knowledge, irrespective of their real level of financial literacy, are more likely to exhibit unhealthy financial behaviors and experience higher levels of economic pressure. Findings from this study, especially the role of underconfidence, have implications for financial literacy researchers and practitioners of family financial planning.

Fintech Nudges: Overspending Messages and Personal Finance Management
Sung Lee
New York University

Using large proprietary money management app data from a major commercial bank in Canada, I study how the app users manage their personal finance upon seeing an overspending message on the mobile app. First, I find that the message recipients reduced spending on the following day by C$8.15, which corresponds to 5.4% of their daily average spending, compared to the non-recipients. Second, these fintech nudges had temporary effect on flow spending and resulted in permanent reduction in cumulative spending. Third, the effects are especially pronounced for the users who are older, have higher liquid wealth, are more finance-savvy, are new to the app experience, or reside in a city with a higher fraction of educated population. Fourth, I find suggestive evidence that these effects could spill over from one app user to another in the same household. On the other hand, the message recipients were less likely to monitor their accounts via log-ins afterward, which is selective inattention known as the ostrich effect.

Financial Literacy and the Use of Financial Advice—A Non-monotonic Relationship
Ning Tang
San Diego State University

Professional advice is considered one remedy for financial management inefficiency resulting from financial illiteracy. However, empirical results based on 2015 National Financial Capability Study data suggest that financial advice may not necessarily serve as a substitute for financial literacy. We find that the propensity of individuals to consult financial advisors initially increases and then decreases with financial literacy level (a non-monotonic hump-shaped relationship), while the propensity for delegating investment decisions to financial advisors decreases monotonically with financial literacy. These results are robust to potential endogeneity. We develop a theoretical model in which individuals have incomplete information regarding advisor quality to explain our empirical findings. By simultaneously considering both incentives for and hurdles to investor use of financial advice—both consultation and delegation–the model successfully predicts the non-monotonic effect of financial literacy on the likelihood of consulting a financial advisor. Policy implications of the findings are discussed.

2020 Academic Research Colloquium for Financial Planning and Related Disciplines

List of Accepted Poster Presentations

Does the Likelihood of Equity Ownership Monotonically Increase with Risk Tolerance? Contrary Evidence
Sherman Hanna
Ohio State University

It has long been assumed that the likelihood of owning riskier, higher return investments will increase with risk tolerance. We present evidence that the relationship between risk tolerance and equity ownership is not monotonic, both with the old risk tolerance measure and the new 11 level measure in the Survey of Consumer Finances (SCF). Even after controlling for income, age, and other household characteristics, the relationships between equity ownership and each of these risk tolerance measures are not monotonic. The ownership rate of stock assets is lower for the highest level of risk tolerance (substantial risk) than for middle levels of risk tolerance (average risk) with similar patterns even after controlling for other household characteristics. We discuss implications for researchers and financial planners.

Focusing on Both Sides of the Balance Sheet: The Benefit of Liability Optimization
Zhikun Liu, CFP®
Empower Retirement

Debt has become a significant issue among US households. Based on our analysis using the 2016 Survey of Consumer Finances, average household interest payments on liabilities exceed expected returns on investment assets by more than 50%. In this study, we first explore the role of US household debt and analyze the impact of different economic, demographic and behavioral factors on household borrowing decisions. We then separate “good” and “bad” debts depending on type and interest rates, and investigate household characteristics associated with these categories. Lastly, our “alpha-equivalent analysis” reveals substantial potential benefits associated with improving household liability management. For households in the 75th percentile ranked by debt interest rate, reducing rates by five percentiles is equivalent to a return increase of 550 basis points on their investment portfolios. Our results indicate that households with lower asset, income, and education levels could benefit most from assistance with debt optimization.

Computing Technology Support for Financial Planning, Tax, and Legal Professionals: A Cross-Case Analysis
Augusto Casas
University of Connecticut

This paper attempts to contribute to fill this gap by presenting a cross-section case study that examines themes, similarities, and differences across the use of computer technology as a support tool for financial planning practitioners, tax professionals, and estate planning attorneys. Specifically, the study focuses on tools available to conduct financial planning, tax, and legal research. The paper presents a summary of current search tools available to financial planners, their strengths, and their limitations. The paper concludes with a set of recommendations to create new information repositories and specialized search engines that better meet the needs of the financial planning practitioner. The paper also presents suggestions for additional comparative studies in areas such as Artificial Intelligence, the Internet of Things (IoT), and Big Data.

The Unsophisticated “Sophisticated”: Old Age and the Accredited Investors Definition
Tao Guo
William Patterson University

Accredited investors are able to participate in unregistered securities offerings such as private equity, venture capital and hedge funds if they meet income and wealth thresholds. This definition provides a simple screening mechanism intended to restrict the purchase of complex securities to investors who are sophisticated enough to “fend for themselves.” We investigate whether older households, who are vulnerable to age-related cognitive decline and are more likely to meet the accredited investor threshold, possess greater financial sophistication than younger nonaccredited investors. We find strong evidence that older households are at risk of meeting the accredited investor definition without having the sophistication needed to avoid high agency costs in a largely unregulated securities market. Accredited households age 80 and older are more than 80% less likely than unaccredited investors age 60-64 to have high financial literacy scores. This reduced financial capability in later life appears to mirror the rate of decline in measures of cognition.

Expectations about Public Pension and Consumption Behaviors
Youngjoo Choung
University of Georgia

In response to growing financial insecurity among the elderly in its rapidly aging population (Kim, 2013), South Korea implemented the Basic Old Age Pension (BOAP) program in 2008. The BOAP is a non-contributory social pension program that covers approximately 70 percent of the elderly population in South Korea. This study examines the association between respondents’ expectation of financial stability on account of receiving BOAP in old age and the changes in their current consumption of non-durable goods. A panel constructed using three waves (2008, 2010, and 2012) of the Korean Longitudinal Study of Aging (KLoSA) dataset has been used for the analyses of this study.

Can a Broker Comply with Regulation Best Interest without being a Fiduciary?
Aman Sunder
College for Financial Planning

Agent Specialization during Boom and Bust: A Frontier Analysis of a Hedonic Pricing Model Testing Market Efficiency
Seongsu Kim
University of Georgia

The aim of this study is to evaluate whether agent specification is increasing or decreasing real estate sales transaction price inefficiency during boom and bust periods and thereby increase or decrease the seller or buyer’s value in the transaction. By modeling on Rosen’s (1974) foundational hedonic pricing model, I apply a non-stochastic frontier model that captures the inefficiencies of both the buyer’s and seller’s side. By sub-sampling the dataset into boom (2013-2018) and bust (2009-2012) periods, I evaluate these portions of values added and lost in the price (i.e., inefficiencies) by a list agent’s market share, share in one’s asset portfolio, and previous sales record. This approach is used on 29 Metropolitan Statistical Area counties in the Atlanta, GA Multiple Listing Data. The major finding of this paper is that during boom periods, an agent’s insight would increase the value of the seller while decreasing the value of the buyer. However, during bust periods, an agent’s specialization would benefit the buyer and disbenefit the seller. The novelty of this research is that it is one of the very first studies that models the foundational hedonic pricing model by an empirical frontier model while addressing the inefficiencies in real estate prices by an agent’s specialization that either delivers positive or negative values to buyers and sellers differently by boom and bust period.

Improving the Description and Prediction of Household Financial Ratios by Using Artificial Neural Network Techniques
Wookjae Heo
South Dakota State University

The purpose of this study described in this paper was to shed light on the need for alternative methods to improve descriptions and predictions of household financial ratios. Using data from the 2013, 2015, and 2017 Panel Study of Income Dynamics (PSID), this study examined the descriptive and predictive power of an Artificial Neural Network (ANN) model and an Ordinary Least Squares (OLS) model when evaluating household savings-to-income ratios and debt-to-asset ratios cross-sectionally and across time. Results suggest that ANN models provide a better overall model fit when describing and forecasting financial ratios. Findings confirm that machine learning procedures can provide a robust, efficient, and effective analytic method when an educator, researcher, financial service professional, lender, or policy maker needs to describe and/or predict a household’s future financial situation. Suggestions for the implementation ANN modelling procedures by household finance researchers, practitioners, and policy makers are provided.

Moderation of Confidence Level on the Impact of Investment Risk Tolerance on Portfolio Risk
Zheying Yao
University of Missouri

Conventional theory holds that there is a positive relationship between investment risk tolerance and investment portfolio. However, people with varying levels of confidence levels would behave differently, with those having a higher level of confidence investing in more risky assets. This study analyzes the relationship between investment risk tolerance, confidence levels, and investment portfolio risk. This paper uses the level of confidence to measure the overestimation or underestimation of financial knowledge and contributes to the literature by demonstrating whether overconfidence or underconfidence of financial knowledge affects portfolio risk and whether it moderates the impact of investment risk
tolerance on portfolio risk.

Gender and Risk
Gina Hall, CFP®
Kansas State University

This research observes the mediating variables of objective and subjective financial knowledge, subjective risk tolerance, and subjective (expected) longevity on the relationship between gender and risky financial behaviors. This study began as a recreation of the peer-reviewed article written by Yao and Hanna (2005) titled, “The Effect of Gender and Marital Status on Financial Risk Tolerance”. The research study includes the concept and reasoning behind the study, specific research question, a relevant literature review for guidance, theoretical and conceptual models, data utilized, variables that will measure the research questions, empirical design, statistical results and finally a detailed summary of the importance of the study.

Conceptualizing Risk
Eun Jin Kwak
University of Georgia

A text mining technique, based on an Application Programming Interface (API) methodology—using narrative data from Twitter—was used to identify how decision makers and consumers conceptualize risk in day-to-day communications. It was determined that unlike academic and normative definitions of‘risk’, day-to-day use of the term is associated with positive, negative, and other descriptors. It was also determined that the way risk and financial risk are conceptualized and applied in real life settings has a variety of emotional contexts. The term ‘risk’ is associated, almost equally, with negative and positive emotional reactions. Information presented in this paper can help educators, financial advisors, researchers, and policy makers better understand the way decision makers and consumers objectively and subjectively evaluate and describe risk. This information may help lead to better investor educational interventions and decision outcomes

A Comparative Analysis of Financial Capability and Asset Ownership Patterns of Generation Z and the Millennial Cohorts: Evidence from a National Study
Swarn Chatterjee
University of Georgia

This paper examines the determinants of financial capability and asset ownership patterns among generation Z respondents using the 2018 wave of the National Financial Capability (NFCS) study. We compare the determining factors associated with financial capability and asset ownership of generation Z with the previous generation—the millennials in the current wave as well as with the millennials when they were of similar age as generation Z in the previous waves. We believe that this is amongst the first studies to investigate the financial capability and asset ownership patterns of generation Z using a national dataset.

Religiosity and End of Life Health Planning
Reem Hussein
Texas Tech University

Effects of Planned and Unplanned Debt on Voluntary Retirement Savings
Juan Gallardo
West Texas A&M University

Using Simple Technical Analysis Indicators on Asset Allocation Decisions
Bryan Foltice
Butler University

This study analyzes the potential effectiveness of using two simple technical analysis indicators to determine the riskiness of portfolio asset allocation. We compare the “buy and hold” returns in the U.S. stock and bond markets from 1962-2017 against an active portfolio allocation strategy based on two simple technical analysis indicators. Using the 100 and 200-day simple moving average of the S&P500 as our technical indicator, we employ a “risk-on” asset allocation strategy (more portfolio allocation in stocks as a percentage) when the S&P500 is above the indicator line and a “risk-off” strategy (less stock/more bond allocation) when below. In this sample, we find that following this rule with the 200-day simple moving average provides excess annual returns of up to 1.23%, with all analyzed allocation combinations posting excess returns. Furthermore, this strategy also shows a reduction in overall risk, with all 200-day strategies posting an increase in Sharpe ratios when compared to the buy-and-hold strategy. Similar, though slightly weaker, results are found with the 100-day moving average strategy. Results from both technical indicators remain consistent when the time periods are broken into two (and four) sub-periods.

Gender Disparities in Financial Knowledge and Overconfidence among Older Adults: Does Cognitive Ability Matter?
Kyoung Tae Kim
University of Alabama

This study explores gender disparities in financial knowledge and the overconfidence of older adults using the 2016 Health and Retirement Study (HRS). Regression results show that females had significantly lower objective financial knowledge than males, and they were more likely to be overconfident in financial knowledge than males even after controlling for various factors. These gender disparities were also corroborated by a number of robustness checks that applied propensity score matching (PSM) analysis or replicated the estimation model using the Survey of Consumer Finances (SCF) dataset. Furthermore, decomposition analyses show that fluid intelligence contributes significantly to the gender gap in financial knowledge and overconfidence, but a considerable portion of gender gaps in financial knowledge and overconfidence remained unexplained due to households’ unobserved heterogeneity. This study provides important insights into understanding the gender gap in financial knowledge related to the retirement well-being of older adults.

Identifying Psychological Barriers to Seeking Financial Advice
Lynnette Purda
Queens School of Business

Existing work on the quality of individuals’ financial decisions has tended to focus on the role of financial literacy. Yet individuals – especially those low in financial literacy – frequently make poor decisions because they fail to obtain advice. To date, there have been limited investigations into why this may be the case. The current work aims to better understand why individuals often fail to obtain advice by investigating the psychological barriers that may prevent or disrupt this process. We interview both consumers and financial planners to identify factors that motivate, and reduce the motivation, to obtain advice. We also attempt to identify the various steps that consumers take as they pursue financial advice with the goal of understanding the psychological barriers that exist at different stages. Finally, we conduct a large-scale consumer survey to better understand the extent to which these barriers exist in the general population and within specific sub-groups of interest. Preliminary suggestions for increasing consumers’ use of financial advice are discussed with an emphasis on recent innovations in fintech.

Discounting, financial knowledge, and financial well-being of US adults
Kyoung Tae Kim
University of Alabama

This study examined the relationship between time discounting and financial well-being with a consideration of the moderating role of financial knowledge. This study used the Consumer Financial Protection Bureau (CFPB)’s measure of financial well-being, which explains consumers’ subjective assessment of financial well-being in four areas. Results from the 2016 National Financial Well-Being Survey showed that discounting was associated negatively while financial knowledge was associated positively with financial well-being. This study also confirmed that financial knowledge plays a moderating role on the association between discounting and financial well-being. Results from this study provide insights to financial practitioners, educators, and policymakers who help US adults improve their financial well-being.

The Effect of Bequest Motive on Investment Portfolio Allocation among Older Adults
Weipeng Wu

Assuming older adults have a shorter investment horizon than the younger, conventional financial advice for older adults is to reduce their portfolio risk. However, this assumption may be invalid for older adults who have a bequest motive, because their investment horizon extends beyond their lifetime. This study is to investigate the effect of bequest motive on investment in risky assets among older adults. Using the 2016 RAND HRS longitudinal data, we find that a strong bequest motive has a significantly positive effect on risky assets investment among older adults.

Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement
Caezilia Loibl
Ohio State University

Financial Stress and IPV: Implications for Financial Counselors and Planners
Nathan Astle
Kansas State University

Finances can be a huge stressor and financial stress has been associated with a host of negative outcomes. In this study, we examined financial stress and low income (issues often seen by financial counselors and planners) as risk markers for intimate partner violence (IPV) perpetration and victimization through the use of a meta-analysis. A total of 90 studies conducted in the United States (US) were examined, yielding a total of 121 unique effect sizes in the analysis. We found that both low income and financial stress were significant risk markers for IPV perpetration and victimization. Implications for the financial counseling and financial planning community are addressed.

Gender, Women, & Power: Equality in Financial Planning
Nathan Astle
Kansas State University

Gendered roles around money have affected women’s access to wealth, class, employment (Mcginn & Oh, 2017; Hu, 2019), and marital satisfaction (Addo & Sassler, 2010; Durband, Huston, & Britt, 2010). As financial planners frequently meet with couples in the planning process, it becomes key for planners to understand both historical context for the lack of financial literacy and financial power that women have in many heterosexual couples. Looking at previous generations gender norms can explain many of the problems women face in past and current relationships (Bisdee, Daly, & Price, 2013) and planners have an increased need to understand the mechanics of couple financial management and how to navigate power imbalances in the room. This article aims to fill gaps in current financial planning literature by both conceptualizing how gender and power interact in financial mediums through a feminist theoretical frame and provide suggestions for planners on decreasing gender power differentials in couples financial planning. This article will also provide historical context and framework around women’s work in and out of the home, which further explains the current financial management trends of women that financial planners see in their offices.The authors will provide several tools for engaging and empowering women in the financial planning process based on skills commonly used in couples therapy, and the personal experience of a twenty-year financial planning professional. This conceptual model consists of a 3-part approach that focuses on financial literacy, application of financial knowledge, and providing accountability through the financial planner. Implications and future research needs will be discussed.

What do Clients Consider Important from their Financial Advisors?
Blain Pearson, CFP®
Texas Tech University

Student Professional Development in a Financial Planning Program – The Award for Professional Development Program
Patrick Payne
Western Carolina University

Financial planning is a competitive industry, and the number of students looking to enter this field is increasing. Professional development activities are therefore becoming increasing important to help students distinguish themselves on the job market, as well as helping employers identify students who can bring immediate value to their firm. Despite the large benefit that students receive from professional development activities, many of them remain reluctant to engage in such extra-curricular activities. This paper explores the pedagogy of a new professional development program that encourages students to develop their professional skills in five areas: industry connection, job application, experience, interpersonal communications, and technology. Results from a cohort of participants are compared against the results of nonparticipants, and the benefits of the program are explored and discussed.

A Qualitative Study on Financial Socialization of Low-Income Adolescents
Sang-Hee Sohn
Seoul National University

Life insurance ownership – a perspective from relationship quality
Yuanshan Cheng
Winthrop University

Life insurance is commonly used to protect future human capital earnings. Liebenberg, Carson, and Dumm (2012) provided a thorough summary of factors related to life insurance ownership in the iterature. Using the Health and Retirement Study (HRS) Leave Behind Survey, this study is the first to add a behavioral factor of spousal relationship in analyzing life insurance ownership. The results suggest that the quality of the spousal relationship is a strong and dominating factor of life insurance ownership. Most individuals are motivated to protect the spouse financially because of the “emotional love” other than following economic theories. The impact of spousal relationship quality is much larger than traditionally explored objective factors. The authors argue that financial advisors should use relationship measurements in their practices to draw more valuable financial advice. There are some behavioral measurements advisors can use within the HRS Leave Behind Survey. This study also illustrates the importance of spousal relationship measurement in life insurance advice.

A Theory of Self-Annuitization
David Blanchett, CFP®
Morningstar Investment Management

The majority of existing retirement spending strategies are based on ad hoc rules without a clear grounding in economic theory. In this paper, we present a dynamic model of self-annuitization derived from the economic theory of utility maximization that can be used to help financial advisors and retirees determine optimal retirement income strategies. The model is considerably more robust than most existing approaches, given that it can treat consumption (i.e., retiree spending) as exogenous and endogenous, it dynamically adjusts spending (consumption) over time, incorporates uneven cash flows, and decomposes the retirement need into discretionary and nondiscretionary pieces.

Introducing the Longevity Portfolio
David Blanchett, CFP®
Morningstar Investment Management

Outliving savings, i.e., longevity risk, is an important consideration when developing a financial plan for a retiree. Purchasing an annuity is widely regarded as the best approach to managing longevity risk; however, annuities remain relatively unpopular today. While a few mortality-linked investments currently exist, they are not widely utilized and will likely not be available, or attractive, for household portfolios for the foreseeable future. This paper introduces the concept of a “longevity portfolio” which is an investment strategy designed specifically to manage the increased potential costs associated with unexpected improvements in mortality using traditional securities (e.g., publicly traded stocks). While the ability of a longevity portfolio to hedge unexpected changes in mortality rates is unknown, certain sectors (e.g., healthcare), industries (e.g., nursing homes), and companies (i.e., those favored by the elderly) would likely to benefit more from unexpected mortality improvements than others; and are therefore attractive additions to a retirement portfolio due to their hedging potential. Longevity portfolios can increase portfolio efficiency, perhaps considerably, even if they cost more than non-liability focused investment strategies (e.g., a traditional market capitalization weighted index) depending on the expectations, preferences, and situation of the respective household (consistent with the potential value of other liability-driven investing approaches).

The Effect of Racial/Ethnic Differences on the Financial Obligations Ratio of Renters and Homeowners
Congrong Ouyang
Ohio State University

The purpose of this research was to investigate the effects of racial/ethnic status, on the ratio of financial obligations payments to income. Our research updated two studies with a broad measure of financial obligations burdens by adding alimony and child support payments to the measure of financial obligations. Additional explanatory variables were added, including expectations variables and a measure of financial literacy. We found that homeowner households and renter households had very different distributions of the financial obligation ratio, so we conducted separate analyses of homeowner households and renter households. Previous research on the financial obligations burden used an arbitrary dummy variable for whether households had a high financial obligations ratio, but we used Ordinary Least Squares (OLS) regressions on the natural log of the ratio. For homeowners, based on the OLS regression, there were not significant differences in the financial obligation’s ratio by racial/ethnic categories. For renters, based on the OLS regression, Black, Hispanic, and Asian renter households had higher financial obligations ratios than otherwise similar White renter households. It is possible that rents and other components of financial obligations prevent renters from becoming homeowners. The positive effects of being credit constrained for renters suggested that credit constrained households already had high financial obligations, rather than having been arbitrarily denied credit and other opportunities such as rental units.

Racial/Ethnic Differences in Financial Knowledge Overconfidence: Evidence from 2018 NFCS Dataset
Sunwoo Lee
Ohio State University

Financial knowledge is often referred to as a key to improving one’s financial decisions. With evident racial/ethnic disparities in wealth, income, and financial well-being at hand, it is important to understand the differences in the level of financial knowledge as well. This study examine whether there exists racial/ethnic gap and where this difference could be attributed to with OLS regression and BlinderOaxaca decomposition analyses. Results from the 2018 National Financial Capability Study showed significant racial/ethnic gaps in objective, subjective financial knowledge as well as overconfidence in financial knowledge. The level of overconfidence was highest among Black, followed by Hispanic, White, and Asian/others. According to decomposition analyses results, the endowments explained over majority of the Hispanic-White and Asian/others-White gap in overconfidence. Key factors contributing to explaining the disparities include socio-demographic variables such as age, marital status, education, and occupation and financial variables such as income, homeownership, financial hardship. With profound understanding of factors related to racial/ethnic differences, policy makers and educators could improve their strategies in enhancing financial knowledge and narrowing the gap.

Savings Automation: Helpful or Harmful?
Dee Warmath
University of Georgia

The Young, the Underconfident, the Poor and the Fraud Victim: Financial Capability and Financial Wellbeing of Vulnerable Consumers
Jing Jian Xiao
University of Rhode Island
Nilton Porto
University of Rhode Island

This study examines relative contributions of financial capability factors to financial wellbeing among vulnerable consumers. The data set used is from the 2016 National Financial Wellbeing Survey commissioned by Consumer Financial Protection Bureau (CFPB). Results show that among financial capability components, financial behavior contributes the most to financial wellbeing of the whole sample, followed by financial skill and financial knowledge. In addition, group differences are shown when subsamples in terms of age, poverty status, confidence, and fraud victim status are examined. Findings have implications for financial educators when they teach consumers especially those who are vulnerable in socioeconomic statuses.

The Effect of Technology Usage on Savings Behavior: Evidence from Saudi Arabia
Preston Cherry
Texas Tech University

Almost Famous: How Do Wealth Shocks Impact Career Choices?
Jacelly Cespedes
University of Minnesota

We study the effect of shocks to household balance sheets on employment choices and their long-term effects. Using a novel dataset of workers in the film industry, we estimate the impact of changes in housing wealth following the housing crisis on homeowners within the same occupation and county. We also account for local labor demand shocks by comparing homeowners to renters. We find that individuals who experience a decline in housing wealth reduce their participation in films with other high-profile talents (individuals that have won prestigious awards), in high-budget productions, that are positively rated, that are likely to win awards, and increase involvement in small films. These shocks have negative long-term consequences on individuals’ popularity and the probability of them landing leading roles. Overall, our results suggest that wealth shocks distort non-salaried workers’ labor decisions due to liquidity concerns and impact individuals’ career paths.

Mediating Effect of Financial Knowledge Underconfidence on the Association between Financial Risk Tolerance and Equity Ownership
Abed Rabbani, CFP®
University of Missouri

Investing in equity is not an easy task. People with varying levels of financial risk tolerance would demonstrate a different level of equity investment. However, the tendency of investors to underestimate their financial knowledge is likely to mediate the association between financial risk tolerance and equity ownership, because, people tend to underestimate their knowledge and take less risk when the task is hard to execute. The purpose of the study is to evaluate the mediating role of underconfidence on the association between financial risk tolerance and equity ownership. We used confirmatory factor analysis (CFA) and structural equation modeling (SEM) to evaluate our model. The results show that it is possible to assess underconfidence using objective and subjective financial knowledge; and underconfidence has a significant mediating effect between financial risk tolerance and equity ownership. Although it is challenging to change someone’s risk tolerance, financial planners may help their clients by addressing underconfidence.

Pre-Retirement Debt Burden and Psychological Well Being
Maurice MacDonald
Kansas State University

The Influence of Natural Disasters on the Demand and Retention of Flood Insurance in Texas
Mark Evers, CFP®
Texas Tech University

Understanding client perceptions of financial adviser education in Australia
Kirsten MacDonald
Griffith University

Client advice-seeking behaviour and outcomes are impacted by financial adviser characteristics such as education. With the international shift towards the professionalisation of financial advisers through obtaining academic qualifications, there is an opportunity to explore the behavioural change implications of Australian financial adviser education reform. Extant literature demonstrates the reputational and signalling effects of professional designations (Black Jr., 2002; Guillemette & Jurgenson, 2017; James III, 2013; Raskie, Martin, Lemoine, & Cummings, 2018). This project investigates how financial adviser education, including professional designations and academic qualifications, impacts the choice of financial adviser in Australia, the characteristics of clients who value credentialed and degree qualified advisers and client perceptions of the rigour and quality concerning designations and qualifications. Industry partner channels are used to electronically distribute web-based surveys to advised clients to gather their demographic data and information on their advice-seeking behaviour and perceptions of financial adviser education. The analysis of results intends to support practice in developing appropriate marketing and education strategies for clients as financial adviser education reform is implemented over the next four years and to provide a benchmark for understanding how financial adviser education reform impacts on perceptions of financial adviser education and advice-seeking behaviour over time.

The Value of Financial Advice for Clients: Perspectives of Australian Financial Advisers
Ellana Loy
Griffith University

Anecdotal evidence suggests that financial advisers find articulating the value of their services to clients difficult. In part, this may reflect that several benefits of financial advice are hard to measure, however, a lack of empirical evidence may also play a role. Not having a clear value proposition for financial advice creates uncertainty, at a time when factors such as market volatility, financial illiteracy and demographic change are thought by the Australian Securities & Investment Committee to be driving an increased need for financial advice. While clients already receiving financial advice often see its value, the Australian Securities & Investment Committee found that there are perceptions from the broader Australian population that financial advice is high cost, only for the wealthy and of greater importance later in life, which can deter them from seeking advice. The recent Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, has also heightened negative sentiment towards and distrust of financial advisers and the financial services industry more broadly, further deterring advice-seeking behaviour. The inability of advisers to clearly articulate their value also undermines the propensity of consumers to seek advice, and is particularly problematic given the impending removal of remaining commissions and shift towards an upfront, fee-for-service business model, which will require the industry to justify its value. This paper surveys Australian financial advisers on where they add value to their clients, which clients benefit the most from advice, relationship management, their range of services and cost to serve and attitudes towards or actions taken to change. As part of a broader study investigating the value of financial advice over time, survey results together with the findings from a systematic quantitative literature review are expected to inform financial advisers, licensees and policymakers on strategies for communicating the importance of seeking financial advice and the value that can be created for clients. Engaging a larger and more diverse client base and unlocking the growth potential of the financial advice sector, would be of benefit to consumers of these services and the economy more broadly.

Local Measures of Investor Attention Using Google Searches
Gabriel Buchbinder
Princeton University

The finance literature on investor attention has recently measured the interest in stocks using the search volume index (SVI) of companies’ ticker symbols on Google. I use the major stylized fact of local bias (LB) in household stock-portfolio choices to test the precision of this measure. Constructing a database of Google searches on stock tickers at the metropolitan level, I show that stock-ticker-SVIs fail to exhibit the property of LB. As a remedy, I propose an alternative measure of investor attention to stocks which seem to reflect more naturally the way retail investors search for information on Google and is consistent with LB behavior. This measure increases estimated LB effects by a factor of 10, suggesting that one standard deviation increase in distance lowers investor interest by around 15%.

Can the Presence of an Associate Advisor Help Regulate Client Emotions? An Empirical Exploration
Derek Tharp, CFP®
University of Southern Maine

Client meetings can be highly emotional events, and emotions can interfere with helping clients achieve their financial goals. This article explores whether the inclusion or exclusion of an associate advisor can be a meaningful tool for the management of the emotional environment of a meeting. In The Theory of Moral Sentiments Adam Smith hypothesized that the more emotionally close we are to those in our presence the less we are able to compose our emotions. This study tests Smith’s hypothesis using a survey of adults in the United States (n=574). Results from a series of ordinal logistic regressions suggest that emotional closeness of a conversation partner is negatively associated with emotional composure.

The Effects of Risk Tolerance on Financial Search Behavior – Differential Effect on Borrowing and Saving Decisions
Dongyue Ying
Ohio State University

Households search for information in order to make better decisions about purchases and financial decisions. Optimal search for financial resources depends on both the expected gains from the financial resources as well as the time and monetary cost of searching. This paper investigates the associations between risk tolerance and financial searching behavior. The study offers a theoretical framework for the possible mechanisms of risk tolerance on searching behavior, both for investment and for credit. Empirical results using 2016 Survey of Consumer Finances (SCF) dataset show positive relationships between two measures or risk tolerance and search effort for both credit and for investments. Reported effort for credit search is higher than the reported effort for investment search. The results also support three hypothesized channels of risk tolerance on searching, that the risk tolerance may be related with the amount of asset/debt, the type of asset/debt, and the tolerated expected value loss. The relationships between search behavior and other covariates are also explored.

Intend to save and (not) committed: The effect of the goal elaboration on saving behavior and commitment
Min Jung Kim
Manhattan College

This research explores how individuals can set budgets with commitment, which has received little attention in prior literature. By examining budget-setting for both spending and saving, we proposed and found that the number of budget categories and saving goal salience jointly determine savings estimates as well as commitment to those savings estimates. Results showed that individuals tend to experience goal conflict when they have the same number of budget categories with a salient saving goal. Under such circumstances, individuals tend to increase money allocation to savings as a reflection of their stronger commitment. This is due to the increased saving goal importance resulted from goal conflict. This research contributes to the body of work on budgeting and planning behavior. We conclude by discussing the theoretical and practical implications of our findings.

The Relationship between Personality Traits and Portfolio Decisions as Mediated by Financial Risk Preference
Yi Liu
Texas Tech University

This paper investigates the influence of individuals’ personality traits on stock investment decisions mediated by risk preference using the 2014 Health and Retirement Study (HRS). Structural equation model results suggest that those with greater openness and extroversion have higher stock market participation and higher stock share mediated by financial risk preference; whereas those with greater conscientiousness and agreeableness have lower stock market participation and higher stock share mediated by financial risk preference. Understanding the role of personality traits on decisions about stock investment can be beneficial to academic researchers and financial planners

Charitable Giving by Couples A Household Bargaining Explanation
Yi Liu
Texas Tech University

This paper examines the relationship between household bargaining power and charitable giving. Using the 2014 wave of the Health and Retirement Study (HRS) and a Heckman selection model, this paper finds that a household in which the husband’s age is greater than his wife’s age has a higher probability of donating money to charity compared to a household in which the wife is older than her husband. Similarly, a household in which the husband’s education is greater than his wife’s has a higher probability of charitable giving compared to a household in which the wife has a greater education than her husband. Additionally, this study finds that both spouses’ educations have a significant and positive influence on the probability and the amount of charitable donation. Lastly, increased income and wealth also increases both the probability and amount of charitable giving.

Financial Counselling Practice and Issues in Australia and Canada
Chris Robinson
York University

Financial counselling, including credit and debt counselling, is an important service for consumers experiencing debt or financial issues. It serves to assist consumers in managing their debts in hopes to avoid bankruptcy and help prevent future financial crisis. Financial counselling aims to assist clients in understanding their behaviour with respect to financial management, consumption and lifestyle and then help to change any negative behaviour that contributes to their financial issues (Berry & McGregor, 1999). The need for financial counselling has steadily increased since 1990’s. Over the past decade household debt in Canada has continued to grow. A demographic breakdown of this trend shows that household debt is higher among better educated (67%) and with higher household incomes (87%) and amongst homeowners (89%) (Statistics Canada, 2015). This study explores the role of financial counselling in Canada in comparison to Australia where financial counselling services and legislation has made significant progress. Our study focuses on the logistics of financial counselling. Our work has a strong social justice approach. We hope findings from this study will be able to assit the financial cousnelling organziations by informing them broadly of our findings and by informing policy makers and financial institutions.

Characteristics of US Households who Chose Fresh Start from Insolvency
Guopeng Cheng
Virginia Polytechnic Institute & State University

When affected with financial hardships, some people decide to declare bankruptcy to establish a payment plan, eliminate debts and obtain legal protection from the courts. However, bankruptcy can remain on peoples’ credit reports for 7 to 10 years, depending on the type of bankruptcy they choose to file for. Depending on state laws, a bankruptcy trustee can be forced to liquidate certain assets, which could delay or disrupt the financial goals of the persons filing for bankruptcy and negatively affect their future financial well-being. Based on the data provided by United States Courts, Table 1 demonstrates the bankruptcy filings that involve mainly consumer debt. Because of the economic downturn, bankruptcy filings peaked in 2010: More than 1.5 million bankruptcy cases were filed in federal courts for that year. Even though the number of total filings have declined since 2010 and remained relatively steady between 2015 and 2018, the factors leading to personal bankruptcy still remain unclear. The purpose of this study is to investigate the determinants of consumer bankruptcy decisions.

Official Information Improves Mortgage-Holders’ Perceptions of Switching: An Example of Using an Experiment to Test Financial Advice
Shane Timmons
Trinity College Dublin

Encouraging consumers to switch to lower-rate mortgages is important both for the individual consumer’s finances and for functioning competitive markets, but switching rates are low. Given the complexity of mortgages, one potential regulatory intervention that may increase switching rates is to provide independent advice on how to select good mortgage products and how to navigate the switching process. Working with a government consumer protection agency, we conducted an experiment with mortgage-holders to test whether such advice alters perceptions of switching. The experiment tested how (i) the attributes of the offer, (ii) perceptions about the switching process, (iii) individual feelings of competence and (iv) comprehension of the product affect willingness to switch to better offers, both before and after reading the official advice. The advice made consumers more sensitive to interest rate decreases, especially at longer terms. It also increased consumers’ confidence in their ability to select good offers. Overall, the findings imply that advice from policymakers can change perceptions and increase switching rates. Moreover, the experiment demonstrates how lab studies can contribute to behaviourally-informed policy development.

Annuitized Income and Retirement Satisfaction
Tao Guo
William Patterson Univerisity

Required Minimum Distributions as a Retirement Strategy: The Tradeoff Between RMD Volatility and the Expected Number of Dollars Paid Out
Stephen Larson
Ramapo College of New Jersey

A client who plans on simply taking their required minimum distributions during retirement should be advised because the annual distributions can be quite volatile, and the volatility depends on the asset allocation they choose. Further, there is a tradeoff between this volatility and the total number of dollars expected to be paid out over a retirement life expectancy. The intent of this paper is to help financial advisors prepare for a discussion about required minimum distributions as a retirement strategy.