Search

This study examines the financial literacy level of Indian professional women and its relation to their retirement planning behavior. We use factor analysis and the Rasch model to evaluate the validity and reliability of a financial literacy scale. Additionally, we use multiple regression to examine the association between demographic characteristics and financial literacy with retirement planning. Our results reveal that the respondents display low levels of financial literacy as reflected by a lack of awareness about both basic and advanced financial concepts. Further, a woman's age, income, profession (financial), and understanding of advanced financial concepts are key factors associated with retirement planning behavior. The findings have implications for financial planning professionals, advisors, regulators, and policymakers in guiding women to make better retirement decisions. [ABSTRACT FROM AUTHOR]

Personal financial planning is a set of activities required for defining objectives, setting action plans, and satisfying financial needs of individuals. Different authors represent the personal financial planning process through models, indicating disadvantages to apply them in the Colombian environment since they have been created in developed countries; they suppose the existence of a financial planning industry and there are no academic studies which adapt them to meet the inherent needs of the environment. In order to solve such disadvantages, this research proposes the definition of a unifying personal financial planning model which embraces different elements that are identified from studied models, applicable in the Colombian environment. [ABSTRACT FROM AUTHOR]

El artículo presenta una entrevista con Juan Montero, gerente de Inversiones de AFAP SURA de Uruguay. Comenta sobre los beneficios del sistema de ahorro individual y discurre sobre el estado financiero de los jubilados en el país. También se considera el concepto del Ahorro Previsional Voluntario (APV).

The purpose of this study is to investigate whether a professional designation affects consumer choice behavior within the area of investment decision making. Forty-six participants were endowed with real money and received hypothetical investment advice from a certified financial planner (CFP) Professional and a stockbroker. Among low-income households, advice from a CFP altered investor choice behavior within hypothetical education and retirement savings accounts. When participants made investment decisions using education funds and received advice from a CFP, the mean expected value of their investment choices was $43,913, compared to $25,870 given advice from a stockbroker. When investment decisions were made using retirement funds, the average expected value given advice from a CFP and a stockbroker was $53,424 and $33,207, respectively. If an investor was risk-neutral or risk-seeking, investment choices were improved when advice was rendered by a CFP relative to a stockbroker. [ABSTRACT FROM AUTHOR]

Regulatory authorities have consulted on the option of banning embedded sales commissions for Canadian financial advisors. Such an action would create more problems than it would solve. It would have serious ramifications for Canadians' access to financial advice and raise issues of choice, industry concentration and price transparency for clients seeking advice on investments and retirement. Financial advisors have much greater knowledge of investments than their clients, who rightly expect value from their advisors' services. Advisors may also face conflicts of interest when they make recommendations about a financial product whose manufacturer might be paying the advisor for selling its products. Banning sales commissions from the manufacturers and having the client pay the advisor directly instead brings its own problems. This is because financial advice is a good with peculiar characteristics. Firstly, financial advice has three fundamental components -- the alpha, beta and gamma factors. Together, they define the roles financial advisors play: (alpha) asset or portfolio manager, (beta) asset allocator (rebalancing a client's portfolio), and (gamma) coach with regard to savings discipline and financial planning. Financial advice has value thanks to the interplay between the three factors. Studies of the issue which have focused on one factor at a time, usually the alpha, produce results that are skewed; however, when studies measure all three factors, the evidence shows that financial advice has significant value, greater than the usual cost charged to clients. Secondly, financial advice is an "experience good", meaning that clients don't know ahead of time how good financial advice is until they see how it works out. Assessing the value of financial advice may take many years. Since they can't immediately measure what they're paying for, clients with modest incomes or wealth are usually willing only to pay low fees, or not pay at all up front. This means that banning embedded commissions would lead to a reduction in demand for advice from modest-income households. The U.K. provides an example which should not be followed. Regulators there have banned embedded commissions, forcing clients to pay directly for financial advice. The result is that modest-income clients have decided not to seek financial advice, even though that decision will likely negatively affect their portfolios. The dangers of this "advice gap" are being downplayed by those who believe that robo-advisors and banks can fill the need instead. In fact, robo-advisors and banks are mostly not equipped to step into the gamma role of coaching their clients. A ban would also mean less choice in the market for a service that needs to be competitive and innovative to serve the broad spectrum of clients' circumstances, risk appetites and needs. In addition, smaller and independent product manufacturers and distributors would be squeezed out, creating a market concentration in the hands of the bigger players. Pricing transparency might very well be another victim of a ban as a market with significant disparities in fee levels is created. In crafting their policies, regulatory authorities should bear in mind that people need to have wide access to financial advice and to have an opportunity to become more financially literate. Keeping the market for financial services and products competitive, innovative and transparent is the path to continued success. A ban on embedded sales commissions would severely hamper these goals. [ABSTRACT FROM AUTHOR]

The article focuses on a urologist's financial planning and investment strategies. Topics discussed include the need for urologists to educate themselves about the basics of financial planning; the use of financial planning software tools to determine the risk needed to achieve the higher rate of return; and the use of diversification to reduce one's overall financial risk.

Using the Asset and Health Dynamics among the Oldest Old (AHEAD), this study presents the first longitudinal results analyzing factors associated with getting and dropping a financial advisor. We find that quantitative as well as qualitative factors are significant when evaluating the value of professional financial advice. Getting a financial advisor was positively associated with becoming a widow(er), asking family members for assistance with financial decisions, seeking professional help for emotional problems, and experiencing increases in income and net worth. Among single and widowed respondents, experiencing significant cognitive decline also increases the likelihood of getting a financial advisor. Dropping a financial advisor was negatively associated with becoming a new widow(er), getting married, and experiencing an increase in net worth. No longer involving family members in financial decisions was strongly related to dropping a financial advisor. We discuss implications for practitioners relevant to both client acquisition and client retention. [ABSTRACT FROM AUTHOR]

The article focuses on the importance of rules and regulation for considering the U.S. investment advisors planning. Topics discussed include amendments required for the protection of Investment Advisers Act, anti-fraud provisions present in the U.S. Securities Exchange Act and relationship between the investors and the investment advisors. It further discusses the liability and funds for risk management.

The article focuses on the role of retail investors in the survival of the fiduciary standards. Topics discussed include role of investment advisors in providing professional investment advice to the investors, impact of fiduciary standards on the investors and rules of the U.S. Securities and Exchange Commission (SEC) in regulating the responsibilities of investment advisors. It further discusses the impact of fiduciary responsibilities on the advisor-client relationships.

The article focuses on future aspects of the financial advice for eliminating the differences between the brokers and investment advisors. Topics discussed include significance and judicial history of the Securities Exchange Act of 1934, judicial history of the Investment Advisers Act of 1940 and role of Securities Act for dealers and brokers. It further discusses the changes and constitutional amendments implemented in the Securities Act.

Changing financial advisors during an advisor-intermediated stock-market game was more likely during periods of relative under performance. Immediately prior to changing advisors, brain activation was greater in areas associated with error detection (dorsal anterior cingulate cortex) and number comparisons (inferior parietal and middle frontal gyri). This combination of activations was analogous to those associated with choosing to stop chasing losses in a gambling task. Advisors may consider using heuristics from gambling research and investment practice that re-characterize loss experiences as something other than errors. During non-switching "quiet" periods, subjects were more likely to be focusing on the images of advisors, reflected by activation in face-specific visual regions. These results may support client-retention strategies emphasizing personal connections rather than pure numerical performance. [ABSTRACT FROM AUTHOR]

The article focuses on investment advice given by investment advisors in the U.S. Topics include who may offer investment advice to clients in the U.S., the licensing requirements for investment advisors, and the regulation of advisors by the U.S. Securities and Exchange Commission (SEC). Information is provided on the compensation requirement.

This study explicates the concept of financial literacy, which has blossomed in use this century. Scholars, policy officials, financial experts and consumer advocates have used the phrase loosely to describe the knowledge, skills, confidence and motivation necessary to effectively manage money. As a result, financial literacy has varying conceptual definitions in existing research, as well as diverse operational definitions and values. This study dissects the differing financial literacy definitions and measures, urging researchers toward common ground. A clearer definition should improve future research, in turn helping consumers better understand and adapt to changing life events and an increasingly complex economy. [ABSTRACT FROM AUTHOR]

This article describes compensation contracts in private equity. It shows that they may not align interest between the investors and fund managers as much as commonly thought. Certain clauses appear as potentially hazardous for investors and others exacerbate conflicts of interest. [ABSTRACT FROM AUTHOR]

The article discusses the individual Asset Liability Management (iALM), an online tool for personal financial planning. It mentions that iALM uses dynamic stochastic programming (DSP) techniques for household life-cycle planning that covers personal goal, life events and investment portfolio. In addition, it examines the features of iALM like its formulation, implementation and optimization, and the principles of DSP. The authors state that iALM helps people to better interpret the options and the risks related to every choice.

Income evaluation and happiness in a number of life domains of people who had experienced an income decline were studied. 800 Participants in a survey indicated whether they had sought information and had taken precautionary measures to mitigate the effects of the lower income. By using Categorical Principal Components Analysis on this data, two scales capturing their reported behavior were constructed. The scales significantly explained people's income evaluation and happiness, in addition to their household income, family composition, and reasons for the income drop. Conclusions for budget advice and education in household financial management were drawn. [ABSTRACT FROM AUTHOR]

The objective of this paper is twofold: (1) to analyze an optimal portfolio rebalancing by a fund manager in response to a ‘volatility shock’ in one of the asset markets, under sufficiently realistic assumptions about the fund manager's performance criteria and portfolio restrictions; and (2) to analyze how the composition of the investor base determines the sensitivity of equilibrium asset prices to a shock originating in one of the fundamentally unrelated asset markets. The analysis confirms that certain combinations of portfolio constraints (notably short-sale constraints and benchmark-based performance criteria) can create an additional transmission mechanism for propagating shocks across fundamentally unrelated asset markets. The paper also discusses potential implications of recent and ongoing changes in the investor base for asset price volatility in emerging markets. [ABSTRACT FROM AUTHOR]

A group of distinguished financial educators, researchers, behaviorists, practitioners, nonprofit leaders, and service providers convened in May, 2004 under the sponsorship of the National Endowment for Financial Education® (NEFE®) for a think tank entitled ‘Motivating Americans to Develop Constructive Financial Behaviors.’ With the stated goals of identifying ways to inspire and maintain positive changes in the way money is managed by individuals and families in American households, participants examined potential approaches, messages, and media most likely to help reverse the kind of negative behaviors that have led to potentially devastating problems, such as low savings rates, ballooning debt load, and inadequate retirement planning. Guided by insights and themes drawn from research papers and articles submitted in advance by the participants themselves, the group examined the various barriers to changing financial behavior and developed actionable points for two primary change agents: professionals and individuals. For professionals, encompassing educators, organizations and practitioners, participants created a list of best practices; for individuals, the group generated a series of practical, readily applicable steps for improving financial circumstances. [ABSTRACT FROM AUTHOR]

In order to gain an understanding of Accredited Financial Counselors' characteristics and professional activities, an online survey of Accredited Financial Counselors was conducted from December, 2002 to February, 2003. This paper describes the sociodemographic characteristics of Accredited Financial Counselors, reports the non-AFC financial counseling designations held by Accredited Financial Counselors, and provides a sketch of the contexts in which AFC designees are employed, including the type of employer, the number of counseling sessions typically conducted each week, and the average cost of counseling sessions. Suggestions for the growth and development of the financial counseling profession are offered [ABSTRACT FROM AUTHOR]