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Graduate Research

The 2011 CFP Board Registered Program Conference featured a research poster session for graduate students (both master’s and doctoral) to share their unpublished research and studies exploring one or more areas related to the personal financial planning profession. The research poster session took place during the Welcome Reception at 6:00 p.m. on Thursday, August 11, with the participating students available to discuss their research and studies.

Research Poster Titles:


The Effects of Information from a Financial Advisor on the Financial Behavior of Low-Income Employees
Crystal R. Hudson and Dr. Lance Palmer, CFP®
University of Georgia

Over the last few decades, American corporations have transitioned from a primarily defined benefit environment to a defined contribution environment and this transition has shifted the responsibility for retirement planning from the employer to the employee. Unfortunately, low-income employees may have been at the greatest risk of being unprepared for this transition and therefore not adequately prepared for retirement. Aside from saving for retirement, low-income employees also lack financial knowledge and financial skills that are needed to make good financial decisions, establish good credit, and achieve long-term goals. Thus the combination of low incomes and poor financial behaviors warrant a focus on low-income employees in this study. Of great interest are the following research questions: Is the financial behavior of low-income employees significantly worse than in other segments of the workforce? Would information from a financial advisor impact the financial behaviors of low-income employees?

This study will use data from the 2007 SCF database to determine if low-income employees’ financial behavior is significantly worse than middle-income and high-income employees. To determine if financial information from a financial advisor has a significant effect on the financial behavior of low-income employees this study will first compare the financial behavior of low-income employees who received financial information from a financial advisor to that of low-income employees who received information from an informal source and a public source. Through a regression model this study will determine if receiving information from a financial advisor has a significant impact on the financial behavior of low-income employees.


The Impact of Financial Sophistication on Demand for Disability Insurance
Janine K. Scott
Texas Tech University

Disability insurance is a vital hedge against an unexpected loss of human capital, yet less than half of U.S. households own this type of insurance. This paper explores factors that affect demand for disability insurance and investigates the impact of financial sophistication and professional financial advice on insurance ownership. Prior research shows that low financial knowledge, behavioral biases, and other barriers to purchase are related to low demand among households. Using the 2007 Survey of Consumer Finances we find that demand for disability insurance increases with financial sophistication, the use of a financial advisor and proxies for group insurance availability. Results indicate that low demand for disability insurance can be attributed to both demand and supply factors.


Integrating the Art of Financial Planning into the Financial Planning Capstone Course
Martin Seay, Elizabeth Jetton, CFP®, Dr. Joseph Goetz
University of Georgia

It is widely accepted that there are two areas of financial planning that must be mastered in order to excel as a professional in the field. The first component is the mastery of technical knowledge spanning numerous topic areas. Coursework is most often focused in this technical area in order to provide students with knowledge base necessary to understand the issues facing clients. The second component of effective financial planning is a mastery of the art of financial planning. An important part of the art of financial planning is the ability to properly frame and communicate complex concepts and information to clients in an understandable and meaningful manner. This is a skill that requires practice and is often not given as much attention in the classroom. As CFP Board takes steps to integrate a capstone course into the financial planning curriculum, it is important to acknowledge and integrate this aspect of financial planning. This poster offers a profile of the capstone course as it is currently taught at the University of Georgia and provides qualitative data on the students’ experience. In addition to the final comprehensive plan presentation, students are currently required to complete presentations throughout the course on each of the topic areas of a financial plan and given feedback on how to effectively communicate with clients. This process of regular feedback on each section of plan integration provides for greater experiential learning effects and skill development in communication. Qualitative data indicates that students felt better prepared for the professional world and more confident with client interactions.


Raising the Next Generation of Financial Planners:Mapping Degree Program Characteristics to the Profile of a Desirable Entry-Level Hire
Laura Ricaldi, Dr. Vickie L. Hampton, CFP®, John Salter, CFP® and Deena Katz, CFP®
Texas Tech University

A profile of the desirable entry-level financial planning hire was created based on a survey of financial planning practitioners conducted in 2009. Twenty-two technical competency areas and personal skills were identified based on importance and required expertise. In phase two of the research (2010), program directors of CFP Board-registered degree programs were surveyed. Directors were asked to rate the importance and expertise expected of their students regarding these same twenty-two competencies and skills. Questions were also asked related to the demographics of the registered programs, whether selected content and courses were offered, and questions related to the CFP® Certification Examination.

Overall, program directors’ ratings of the level of expertise they expected of students were in line with what planners desired of an entry-level professional. Where differences between program directors and planners did lie were in the ratings of importance. In general, program directors tended to slightly overestimate the importance of a number of the technical skills, and highly underrate the importance of the “softer” skills relating to communication and counseling compared to practitioner respondents.


Which Types of Risk Tolerance Questions are Most Strongly Associated with Portfolio Allocation Preference?
Michael Guillemette
Texas Tech University

A variety of risk assessment surveys are used throughout the industry when financial planners are determining an optimal portfolio allocation for their clients. The literature on risk tolerance overwhelmingly justifies the use of surveys based on validity and reliability or psychometric testing which generally measure the consistency of correlations among questions in the survey. Yet most surveys contain questions where no theoretical justification is provided for their inclusion, and there has been little research examining the relation between these questions and actual investor portfolio behavior. The purpose of this study is to sort questions from a risk tolerance survey based on theory in order to determine which types of questions are most likely to reflect a client's actual portfolio allocation preference. I compare Arrow-Pratt, loss aversion and outcome-based measures on the preference for risky assets. I find that outcome-based and loss aversion measures should be used when determining a client's portfolio allocation preference. These two measures are also strongly associated with recent investment changes. The findings of this study should provide planners with a better understanding of how well different risk tolerance questions predict client response to market risk in order to more accurately align portfolio recommendations with client preferences.


Top Ten Teen Financial Tips Train Teens
Joan Stafford
University of Missouri

The “Top Ten Teen Financial Tips” program began in August 2011 as an education outreach to Missouri high schools. Twice a week, two Personal Financial Planning students traveled to a Missouri high school Personal Finance class to talk with teens about ten, basic personal financial practices; discovered through a survey of students at both the University of Missouri and Missouri State University. As every high school student in the state of Missouri must complete a ½ credit of personal finance as a graduation requirement, enrollment in the courses is high and well distributed across socio-economic spectrums.

During an hour long program, the Personal Finance students engaged the high school students in discussion, games, and quizzes designed to teach them the top ten teen financial tips: Education for Income, Budget Your Money, Establish Good Credit, Emergency Money, Manage Your Risks, Compounding Interest, Smart Investing, Don’t Forget About Taxes, Think Outside Your Box, and Believe You Can. The intent of the program was to support efforts of personal finance teachers, to provide peer education in personal financial planning principles, and to introduce personal finance as a career option to students.

The program was funded by a grant from the Youth Advisory Board of State Farm Insurance. During the 2010-2011 school year, the program reached 50 high schools and affected close to 5,000 high school students across Missouri. This poster will share the outline for the PowerPoint, results of basic survey data collected from the high school students.


Understanding the Shift in Demand for Cash Value Life Insurance
Barry Mulholland, CFP®
Texas Tech University

Life insurance is a tool that households use rationally to hedge against the uncertainty of labor income flows over the life cycle. Overall demand for life insurance continues a 50-year decline. Concurrently, there has also been a shift away from cash value life insurance toward term life insurance over the past 15 years. The popular press and some life insurance demand literature suggest the change in demand is driven by mainly changing demographics and changes in timing of family formation. This paper attempts to identify exogenous factors influencing the demand for cash value life insurance beyond the demographic factors. Using the 1992 through 2007 Surveys of Consumer Finances and logistic regression, we find that the late 1990s introduction and expansion of tax-advantaged retirement accounts, such as Roth IRAs and increased IRA limits, as well as the introduction of education savings plans, such as 529 plans and Coverdell ESAs, is having a downward affect on cash value life insurance demand. We also explore as a possible exogenous factor the effect of the changing U.S. tax laws after 2001 regarding increasing estate tax exemptions but find no significant evidence of a change in demand for cash value life insurance due to these tax law changes.

Council On Education
CFP Board’s Council on Education advises CFP Board on the development and clarification of all educational policies related to the CFP® certification process.