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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
 

11:30am

D1a - What Matters in ETF Selection? [CFP ETFs]
Explains Hougan (2014), low expenses are the main characteristic that investors look for when selecting an ETF. Challenging this common practice, Hougan develops a compelling theory that it is more important for investors to consider tracking difference, defined as the difference between the net-of-expense return on an ETF and the return on its benchmark index, when they go about selecting an ETF. Inspired by Hougan’s theory, this study examines the impact of both expenses and tracking difference on ETF performance. The relationship between expenses and performance is much stronger than the relationship between tracking difference and performance. This study shows that the slightly positive relationship between tracking difference and performance is attributable to the fact that funds with higher tracking difference tend to have lower expenses.

Author(s): David Nanigian

Presenters
avatar for David Nanigian, Ph.D., CFP(R)

David Nanigian, Ph.D., CFP(R)

Associate Professor of Finance, California State University, Fullerton
- ETFs- Active vs. Passive Investing- Opportunities for firms to invest in the future of the Mihaylo College's CFP Board-Registered Personal Financial Planning Program


Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1A

11:30am

D1b - Why Do People Invest in Overpriced ETFs, Can Behavioral Nudges Help? Results from a Nationally Representative Experiment [CFP ETFs]
Why does anyone invest in high-priced (over-priced?) index funds when there are low-cost alternates with indistinguishable performance, costing investors approximately $7 billion in unnecessary fees (Cooper et al. 2016)? Does a change in how fees are displayed nudge people away from investing in high-fee index funds and avoid wasting their money? Through a population-based survey experiment, we tested different cognitive mechanisms and heuristics to account for this enduring anomaly and different intervention strategies could potentially rectify it. Our preliminary results reject the hypotheses that when it comes to investing, (a) people are using price as a signal for quality; (b) people are price insensitive. Instead, our preliminary results reveal that many investors seemed to be relying on a naïve diversification heuristic to make investment choices. Changing how fees are displayed had negligible effect on behavior. With appropriate choice architecture policy, this unproductive transfer of wealth may be mitigated.

Author(s): Ray Sin, Ryan O. Murphy, Angela Fontes, Mark Lush

Presenters

Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1A

11:30am

D2a - Confidence, Overconfidence and Investor Decisions: Are You Your Own Worst Enemy?
Individuals have lower levels of financial knowledge than they did in prior years (NFCS 2015). However, despite the lower knowledge levels, individuals report higher confidence in their knowledge. This gap, between perceived knowledge and actual knowledge, is overconfidence. Overconfidence refers to an individual’s propensity to overestimate the accuracy of his or her estimates, resulting in narrow confidence intervals, an overestimation of precision, and an underestimation of risk. Using FINRA's 2015 National Financial Capability Investor Survey, this analysis explores how overconfidence is related to investor characteristics and decisions. Is too much confidence in your investing knowledge harmful to your investment performance?

Author(s): Colleen Tokar Asaad

Presenters
CT

Colleen Tokar Asaad

Assistant Professor, Baldwin Wallace University


Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1B

11:30am

D2b - Peer Effects, Personal Characteristics and Asset Allocation
We study the relative importance of social factors (including household, workplace, and neighborhood peer effects) and personal characteristics (including age, gender, tax rates, and funds under management) for asset allocation decisions. The most important factors (in order) are household peer effects, personal characteristics and workplace peer effects. Neighborhood peer effects and financial advice play a less important role. We use instrumental variables for both household and workplace peer effects and find results that are consistent with causal peer effects.

Author(s): Jasmine Fang, Annie Zhang, Ben Jacobsen, Ben Marshall

Presenters
JJ

Jiali (Jasmine) Fang

Senior Lecturer, Massey University


Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1B

11:30am

D3a - Disability Type, Financial Capability, and Risky Asset Holding
Adults with disabilities are less wealthy and less financially capable than other adults in the U.S. but some of them still have potential for seeking long term financial planning services. The purpose of this study is to examine whether disability type and financial capability are associated with risky asset holding of adults with disabilities. Using data from the 2015 National Financial Capability Study, we find that adults with different types of disabilities have different chances of holding risky assets. Results of a bivariate logistical model show that, compared to people who are deaf, people who are blind or have difficulties in dressing and bathing are more likely, while people who have serious difficulty concentrating or  a work disability are less likely, to hold risky assets. After controlling for  other variables in the logistical model, people with work disability are still less likely to hold risky financial assets than the deaf.

Author(s): Jing Jian Xiao, Barbara O'Neill

Presenters
avatar for Jing Jian Xiao

Jing Jian Xiao

Professor and JFCP Editor, University of Rhode Island
Dr. Jing Jian Xiao is a consumer economics professor at University of Rhode Island. He is also the editor of Journal of Financial Counseling and Planning and the co-guest editor for the special issue on “Consumer Wellbeing in Asia” of Journal of Consumer Affairs.


Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1C

11:30am

D3b - CANCELLED - The Affordable Care Act (Obamacare): Did it Really Accomplish What it Intended?
It is widely accepted that financial planning for retirement is deemed wise and essential to maintain an equally sound financial quality of life post-career.  However, changes in public policy (specifically, the implementation of the Affordable Care Act (Obamacare)) can subject individual plans to unintended consequences.  This paper posits that an individual who has a financial advisor is less likely to have seen an increase in out of pocket expenses (including deductibles and premiums) after the implementation of the Affordable Care Act.  Such findings are confirmed by means of a robust survey study encompassing a representative sample.

Author(s): W. Lance Hocutt

Presenters
avatar for William Lance Hocutt

William Lance Hocutt

President and Founder, Lance Hocutt Financial Group
20 year practitioner and current Ph.D. Student at Texas Tech University


Tuesday October 2, 2018 11:30am - 12:20pm
Michigan 1C