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Welcome to the 2018 AFS Annual Meeting, being held this year, in conjunction with FPA in Chicago!

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Oral Session [clear filter]
Tuesday, October 2
 

9:00am

B1a - Measuring Relative Risk Tolerance: A Cautionary Tale [CFP Risk Assessment]
Financial planners are increasingly being asked by regulators and practice standard boards to evaluate the relative risk tolerance of their clients. Two approaches dominate the evaluation process: economic and psychometric measures. This study was designed to answer the following questions: (a) what is the strength of association between economic and psychometric relative risk tolerance measures? (b) which assessment technique is statistically associated with financial planning proficiencies? and (c) which method of assessment provides a better description of financial planning behavior? Results suggest that while the two measurement approaches are positively correlated, the effect size of the association is modest. The key finding from the study is that only the psychometric approach was related to financial risk taking behaviors. Based on the findings, it was determined that the psychometric assessment approach may be better suited to evaluate situations in which uncertainty and subjective probabilities are the norm.

Author(s): John Grable, Narang Park

Presenters
avatar for John Grable

John Grable

Professor, University of Georgia
We provide leading-edge teaching, research and outreach that improves the economic well-being for families, increases the quality of life in communities and prepares future leaders and entrepreneurs.Our graduates are entrepreneurs, financial planners, consumer journalists, community... Read More →


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1A

9:00am

B1b - Profile to Portfolio - Where is the Missing Link? [CFP Risk Assessment]
Significant research has explored how we measure a client's tolerance for risk, and some research has evaluated how advisors combine various client behavioural and planning attributes to arrive at a "risk profile" for a client. From this stage advisors are then expected to be able to map to the product solutions or portfolios that they intend to recommend ensuring they are suitable. This stage requires that we have agreement on how we measure the risk related to these products and that there is an acceptable methodology to map this back to the profile of the client. A search of the literature as well as the practice illustrates there are many possible appoaches but little consensus because of the wide variety of risks: client expectations, magnitude and duration of drops, liquidity, leverage, guarantees, downside volatility. This paper looks at a cross section of approaches and proposes a rubric for evaluation.

Author(s): Shawn Brayman, Nicki Potts, Kira Brayman

Presenters
avatar for Shawn Brayman

Shawn Brayman

CEO, PlanPlus


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1A

9:00am

B2a - Perceived versus Actual Investor Sophistication; A Behavioral Study
This survey solicits information from individual investors on retirement and non-retirement account investments, actual level of investment sophistication, and self-perceived level of investment sophistication, along with many demographic variables. This study will investigate the relationship between actual and perceived investor sophistication to determine retirement preparedness of investors, as well as whether investors understand their level of financial preparedness. It is hypothesized that most investors are not as prepared for retirement nor as sophisticated investors as they believe. Additionally, it is hypothesized that there will be a difference in results related to age, education, and gender.

Author(s): Stuart Michelson and Sarah George

Presenters
avatar for Stuart Michelson

Stuart Michelson

Roland & Sarah George Professor of Finance, Stetson University


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1B

9:00am

B2b - Do As I Tell You, Not As I Do
The purpose of our survey is to improve understanding of how financial planners/advisors make their own financial planning and investment decisions. One would expect professionals to lead by example. The survey focuses on the following areas of comprehensive financial planning: cash flow management, debt, retirement planning, investments and estate planning. Our main goal is to investigate if financial planners practice what their preach.  A secondary goal is to identify the characteristics associated with the advisers that best plan their own financial lives.

Author(s): Inga Chira, Krisine Beck, Hsin-Hui Chiu, Asamian Negin

Presenters
IC

Inga Chira

California State University-Northridge


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1B

9:00am

B3a - Do the Product Markets Matter? The Case of Innovation
This paper examines the effects of competitive threats on innovation at firm level. Using Hoberg, Phillips and Prabhala’s (2014) product market fluidity to capture competitive threats from rivals, we find that firms with high product market threats will invest more in R&D and generate higher number of patents and patent citations. In addition, that positive effect of competition on innovation is more pronounced for firms with smaller market shares or firms in more competitive industries. We also document that investing in more innovation helps competition-threatened firms increase their market power in the future. Overall, our results suggest that product market threats create incentives for firms to innovate to “escape” competitive pressure.

Author(s):  Lai Van Vo, Huong T.T. Le, Danh Vinh Le

Presenters
LV

Lai Van Vo

Assistant professor of Finance, Western Connecticut State University


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1C

9:00am

B3b - Trust and Financial Inclusion
This study examines the role of trust in financial inclusion around the world. Using financial inclusion measures from the Global Findex database and measure of trust from the World Values Survey, the study finds evidence that trust is important for explaining cross-country differences in account ownership and savings, the use of credit card, forms of borrowing, and the prevalence of mobile technology use in financial transactions. Specifically, trust encourages formal financing and the use of mobile technology; the relationship is also evident among wealthier economies. The trust-financial inclusion relation is robust to alternative specifications. When trust is instrumented by social diversity and religious measures, the 2SLS regression results confirm that the relationship is not driven by reverse causality. The findings confirm that trust could be an important determinant for access to formal financing.

Author(s):  Xiaoyan Xu

Presenters
XX

Xiaoyan Xu

Paul Larsen Consulting


Tuesday October 2, 2018 9:00am - 9:50am
Michigan 1C