FINANCIAL PLANNING REVIEW最新文献

This paper introduces a novel and potentially essential financial well-being variable—worldview conviction—for financial professionals, researchers, and policymakers to more accurately predict an individual's financial well-being. Using the results from a sample of 492 participants, this paper finds evidence that having convictions about how life works (i.e., personal worldview) predicts financial well-being indirectly through an individual's aspirational life goals (i.e., values). More specifically, evidence was found that higher levels of conviction in a personal worldview predicted more intrinsic values. Intrinsic value types (goals related to personal growth, deeper relationships, or community contribution) were found to be associated with higher financial well-being, while extrinsic value types (goals related to acquiring wealth, fame, or image) were found to be associated with lower financial well-being.

Life insurance coverage is steadily declining with only about half of Americans currently holding any type of life insurance. This trend suggests that a growing number of households may have inadequate financial resources in the case of death of an income earner. This study describes the characteristics of households who are financially inadequately protected in the event of income earners' deaths and examines the role life insurance product type and financial knowledge for adequate financial resources. We use the 2022 Survey of Consumer Finances limited to households with at least one member who holds full-time employment, and living with two or more household members (n = 1818). We use repeated-imputation inference (RII) logistic regression analyses to examine households with adequate life insurance holdings, adequate net financial assets, and adequate net worth in the event of income earners' deaths. The data show that the majority of households in this sample have inadequate financial resources to compensate for the death of an income earner (56%) and that this group shows greater financial and health-related vulnerability. Through regression analysis, we find that all three adequacy measures were associated with life insurance product type, whereas financial knowledge was only intermittently significant. This study informs efforts to provide effective life insurance information and education.

Recent work puts forth “net worth optimization” as an extension of asset-only mean–variance optimization and liability-relative optimization in which all of the components of an individual's holistic economic balance sheet are included in the optimization. This type of holistic, total portfolio optimization is constrained to include an untradable allocation to two entries in an individual economic balance sheet: the person's human capital and the person's nondiscretionary consumption liability, in which both are modeled as separate personalized combinations of asset classes (and perhaps individual stocks or bonds) based on the expected nature of their cash flow characteristics. In a series of controlled optimizations in which various parameters are varied, we study how changes in human capital modeling (riskiness) and balance sheet strength (funding status) influence the recommended asset allocation for an investor's financial capital asset allocation. Net worth optimization separates an investor's risk tolerance (attitude toward risk) from the investor's ability to take on risk (risk capacity), allowing risk tolerance to serve its original purpose.

In recent years, Environmental, Social, and Governance (ESG) oriented investments have grown significantly in terms of volume and influence within the global financial markets. However, there is also a notable countertrend against ESG investments in certain regions and sectors, driven by skepticism around ESG performance, regulatory concerns, and political opposition. Therefore, understanding factors that drive investor attitude towards these ESG assets is crucial. Using data from National Financial Capability Study (NFCS) in 2021, this study delved into exploring factors, specifically values, investment experience, and investment knowledge, that are correlated the ESG investment attitude of US investors. Findings showed that while valuing social responsibility was positively, extensive investment experience was negatively associated with ESG investment attitude. In addition, subjective investment knowledge was positively, while objective investment knowledge was negatively associated with ESG investment attitude. These factors collectively predicted 39% of the variability in ESG investment attitude. These findings highlighted the complex interaction among investment values, experience, and knowledge in determining individual attitudes towards ESG investment. The study implies the need for enhanced investor education on ESG issues and in designing strategies related to investment diversification, including ESG assets.

Financial advice has historically been narrowly focused on investing decisions, which has led to skepticism from researchers and policymakers about its value, both in terms of the net alpha and personalization level of advised portfolios. This article explores the potential value of broader, or holistic, financial advice that also covers savings, debt and insurance decisions, which are relevant to a much broader population, not just those with enough wealth to care about investment alpha. The results show that there's tremendous value in holistic financial advice, which is worth $4384 per year or 7.5% of annual income for the typical household and translates into 2472 bps of the median 401(k) account balance. More importantly, this type of advice can be especially valuable for those with lower income who historically have been underserved. While policymakers have traditionally focused on the costs of financial advice, this research suggests that they should also be concerned about ensuring low and middle-class households have access to valuable holistic guidance, which is becoming increasingly affordable by leveraging AI and other technologies.

Using data from the 2021 National Financial Capability Study (NFCS), this study examines how individual investors' financial sophistication influences their response to the stock market in two scenarios: when the market drops by 20% and when the market increases by 20% for a brief period. The findings indicate that, relative to holding stocks, individual investors with higher levels of financial sophistication are more likely to purchase additional stocks and less likely to sell stocks when they experience a market drop for a brief period. Similarly, the study investigated how individuals react when the stock market rises for a short period and discovered that they are less inclined to buy and sell stocks than to hold them. Additionally, the results of this study provide insight into the case of myopic loss aversion (MLA), a supplementary finding of this paper. In addition to finding investors' optimal choice of buying and selling when the market moves, the present study provides supporting findings regarding the number of information sources used and trading frequency, all of which make a strong case for the influence of financial sophistication on MLA. In light of the recent COVID-19 and the ensuing volatility in the stock market, understanding how financial sophistication influences investors' reactions to the stock market is crucial for researchers, financial professionals, and policymakers.

Procrastination in estate planning poses significant challenges in personal financial planning. Despite recognizing its importance, many individuals delay estate planning, risking unplanned estate distribution and family conflicts. This procrastination, driven by discomfort and perceived ample time, leaves legacy unstructured, failing to meet the testator's wishes and needs. Understanding procrastination in estate planning is crucial as it affects financial security for surviving dependents and the orderly transfer of assets. Procrastination research, although extensive in academic and professional contexts, has not adequately addressed estate planning, leaving a gap in comprehending this behavior within financial decision-making. This article systematically analyzes procrastination in estate planning, presenting a theoretical framework based on the Rubicon Model and incorporating the mood-repair hypothesis and temporal motivation theory. It outlines the estate planning process, identifying phases where procrastination occurs and the possible reasons behind it. The framework explains how negative emotions and discounted future benefits contribute to delays, impacting the timely completion of estate plans. The article highlights the role of financial advisors in helping clients navigate estate planning, offering practical recommendations to improve client engagement and ensure better financial outcomes.

This paper explores factors influencing the success of financial planning programs in higher education. It can be used as a guide in the development of a financial planning program. Using a mixed methods approach, the study combines a comprehensive survey of past and present CFP-Board registered program directors and in-depth qualitative insights from the authors' own experiences. The survey encompasses demographics, competition participation, job placement, and perceived administrative support. Key elements of a successful program such as curriculum design, student engagement activities, diversity initiatives, faculty recruitment, and institutional support are discussed. Experiential learning opportunities, outreach efforts for diverse talent, and networking events emerge as critical factors in a successful program. Insights from program directors emphasize the importance of ongoing curriculum development aligned with professional trends, interdisciplinary perspectives, and real-world case studies. Challenges include resource constraints and faculty staffing. The findings offer insights for program directors, faculty, students, administrators, and other professional designation programs to enhance program quality, diversity, and impact, serving the needs of students and the broader community. The findings provide an outline for other professional programs (i.e., CFA or CPA) in how to design, implement, and run a successful program.

This article creates a typology to assess four categories of financial well-being based on a combination of household financial ratios. Most financial well-being scales are based on subjective measures (i.e., perceptions), as objective markers have not reliably encapsulated financial well-being. We define a conceptual model, the equilibrium model of the household (EMH), and use discriminant analysis to extract categories of financial well-being. The continuum of these categories is financially distressed (lowest), financially fragile, financially stable, and financially flourishing (highest). Our results demonstrate these categories are consistent with the Consumer Financial Protection Bureau's (CFPB) Financial Well-Being Scale, a subjective scale. Higher CFPB scores were associated with higher category ranks. Our results provide additional evidence to support construct validity of the CFPB scale and may offer more actionability to the CFPB scores because specific financial outcomes/behaviors associated with our categories of financial well-being correspond to ranges of the CFPB scale. However, we argue that the claim whereby the CFPB scale measures a concept beyond traditional financial measures is imprecise and may even reflect the existence of noise in the CFPB's data, raising questions about its reliability.