Evaluating the Impact of Financial Planners

Abstract

The growing complexity of investment decision-making has increased the potential value of advice from a financial professional. Past research provides only a very partial answer to the question of whether professional financial advice leads to better investment practices and results. In this chapter, we review findings in the existing research literature, detail 'best practice' research approaches for drawing confident conclusions regarding causal influences, and provide an example of such an approach using data from the 2007 Survey of Consumer Finances. Our results suggest that the benefits of financial advice may be overstated in the absence of methodological rigor.

Planning Ahead or Living a Day at a Time? A Family History of AD and Retirement Planning

“…By comparison, a 2010 national survey found that 33% of respondents had met with a financial advisor in the past 12 months, 39 while another study found that 24% of respondents reported regularly consulting with financial planners to make decisions about saving and investments. 40 Forty-one percent of our respondents reported having ever calculated how much money they will need to save for a comfortable retirement. This percentage is slightly less than the 46% of respondents who answered the same question in the affirmative in a national survey conducted a few months later.…”

“…In general, the estimated odds ratios associated with the standard sociodemographic, economic, and attitudinal covariates are consistent with the findings of past studies. 22,27,45 Gender, age, and education are significantly linked to each of the 3 retirement planning activities. Economic well-being, as captured by home ownership, income, and having more than 1 retirement plan, also appear to alter the odds of engaging in these retirement-related endeavors.…”

“…Finally, there is a growing concern about the inattention that Americans more generally give to retirement planning. 20,21 Research has identified many sociodemographic correlates of inattention to retirement planning, [22][23][24][25][26][27] but little attention has been devoted to the role that family health histories may play.…”

How to Make the Market for Financial Advice Work

“…15. See other chapters: Hung and Yoong (2013); Finke (2013); Turner and Muir (2013); and Zick and Mayer (2013). 16.…”

Family Health Histories and Their Impact on Retirement Confidence

“…As members of the largest American birth cohort begin to retire, there is a growing interest in understanding the factors that affect retirement preparation behaviors and attitudes (Adams & Rau, 2011; Pruchno, 2012). Studies of retirement-related financial knowledge, financial advice seeking, retirement savings, retirement expectations, and retirement patterns abound (Agnew, Szykman, Utkus, & Young, 2007; Howlett, Kees, & Kemp, 2008; Lusardi & Mitchell, 2007, 2007a, 2007b, 2009; Mayer, Zick, & Marsden, 2011; Midanik, Soghikian, Ransom, & Polen, 1990; Morrin, Broniarczyk, Inman, & Broussard, 2008; van Rooij, Lusardi, & Alessie, 2012; Zick & Mayer, 2013). Lacking, however, are studies that focus on overall retirement confidence—that is, how sure working-age adults are that they will have sufficient resources to live comfortably throughout their retirement.…”