AFS Annual Meeting 2018

With the increasing costs of education and growing student loan debt, it is imperative that university students select a program of study that adequately engages and prepares them for the workforce. In this study, we examine perceptions of career-readiness between financial planning students and finance students via the lens of self-determination theory (STD). We examine perceptions of career preparedness based on a motivational model that underscores student engagement through dynamic academic work and supportive academic/social networks. The results are expected to support the relevance of student intrinsic need satisfaction for competence, autonomy and relatedness during school tenure and that opportunities for intrinsic need satisfaction are influenced by program of study. Employers, universities and prospective students nationwide can benefit from the findings and implications of this research. We hope to further prompt the development and visibility of financial planning programs nationwide as a worthwhile study option for students.

Author(s): Laura Mattia, Nandita Das, Janine K. Scott

Using 2015 National Financial Capability Study - Investor Survey Instrument, this study aims to examine the effects of investment knowledge, financial risk tolerance, information search behavior, and the involvement of online financial resources on investment styles. This study adapted Fan and Chatterjee’s (2017) information search framework and the categorization of sources of information search to examine the investors’ behaviors.

Author(s): Lu Fan, Swarn Chatterjee

This paper analyzes whether older men and women differ in their trust of financial advisor using data from the 2009 National Financial Capability Study (NFCS, 2009).

Author(s): Cagla Yildirim, Charlene Kalenkoski

Elder financial exploitation has been estimated to cost older Americans in excess of $35 billion annually. This paper expects to find evidence of older Americans' preference for being protected from financial exploitation. Using probit and ordered probit models, as well as pooled cross-sectional data from FINRA's National Financial Capability Study, this research analyzes older Americans' preferences for protection from financial exploitation and the correlation these protections have with older American's use of financial products and services. The results indicate that the preference exists and may be correlated to increases or decreases in usage dependent on several factors, including transparency of compensation and complexity of product.

Author(s): B. Steele Campbell, Charlene Kalenkoski, Mitzi Lauderdale

Prior research has analyzed the predictability of securitized real estate returns using economic variables, financial factors, and real estate factors. Additionally, scholars contend that an underlying real estate factor exists that explains both securitized and direct real estate returns. We detail how to extract factor risk, return, and correlation assumptions from a set of asset-class risk, return and correlation assumptions. Such capital market assumptions are key tools in the operations of the financial markets. Using a third-party set of such asset-class assumptions, we then implement the extraction technique to demonstrate how to evaluate the implied factor loadings on future REIT returns. Some of these factors are based on economic variable assumptions while others are based on real estate and financial factors. Additionally, we can apply our technique to evaluating other specialized real estate investments including value-added, opportunistic, and region-specific vehicles. Our analysis contributes to the real estate return literature and offers useful insight to the veracity of these important inputs to investment decision making and portfolio construction.

Author(s): Brian C. Payne, William W. Jennings

Previous research using the Survey of Consumer Finances (SCF) has found a positive effect of education on the likelihood of having financial obligations ratio over 40%, but until 2016, SCF datasets did not have direct measures of financial literacy.  The 2016 SCF dataset has three financial literacy questions, allowing for the use of a financial literacy score as an independent variable. The purpose of this study was to analyze how financial literacy affected the likelihood of U.S. renter and homeowner households having a financial obligations ratio over 40%. Based on the logistic regression results, no evidence of relationship is supported between financial literacy scores and households’ having a heavy financial obligations burden. The lack of an effect of financial literacy on having a heavy financial obligations burden suggests that having a financial obligations burden over 40% of income is not necessarily a mistake, for both homeowners or for renters.

Author(s): Congrong Ouyang, Sherman D. Hanna

The purpose of this study is to investigate how five well-being characteristics from Positive Psychology are related to the FSE beliefs of older adults: positive emotions, engagement, relationships, meaning, and accomplishment. This study builds upon existing literature by examining how psychological and social environmental factors shape FSE beliefs using theory and literature from Positive Psychology. Furthermore, financial planning researchers predominantly use observed scales to measure psychological constructs; this study demonstrates how a confirmatory factor analysis is employed within a structural equation modeling framework to measure psychological constructs and more effectively manage error with a large dataset commonly used in financial planning research—the Health and Retirement Study.

Author(s): Sarah D. Asebedo

We examined the association between holding a student loan and financial satisfaction and the moderating role of financial education using the 2015 National Financial Capability Study dataset. Households that hold a student loan had a lower level of financial satisfaction than did those without a student loan. We found a moderating role of receiving both formal and informal financial education on the relation between student loan and financial satisfaction regardless of for whom they took the loan. Our findings confirmed the importance of financial education and suggest that receiving a thorough combination of formal and informal education will improve student loan holders’ financial satisfaction.

Author(s): Kyoung Tae Kim, Jonghee Lee, Jae Min Lee