Use of financial planners and portfolio performance

Postprint.Using modern information economics as the conceptual framework and data from the 2013 Survey of Consumer Finances, this study adopts a decomposition technique to explore the relationship between the primary information source used by U.S. investors and their household investment portfolio performance. The sample includes households with investable assets and those whose primary information source is financial planner or self-directed sources. Households that received large amounts of inheritance or gifts within the past year are excluded from this study due to the necessity of additional planning and the associated time commitment to accomplish it. The findings reveal that investors who consult with financial planners have a higher probability of achieving better household investment portfolio performance than self-directed investors. Results also show that household income and investor's gender mediated the effect of information source on investment portfolio performance. This study is one of the first to provide empirical evidence of a positive relationship between the service that U.S. financial planners provide and their clients' financial outcome.Lei, S. (Department of Accounting, Economics and Finance, West Texas A and M University); Yao, R. (Department of Personal Financial Planning, University of Missouri)Includes bibliographical references

The Impact of financial planning on portfolio performance

Abstract of conference presentation make at the Association for Financial Counseling Planning and Education, 2014 Annual Research and Training Symposium.Abstract only. Nowadays, individuals and households are increasingly responsible for their own wealth accumulation and preservation while the financial market are growing with complexity (Ho, Palacios, and Stoll 2012). However, empirical studies have found that most of the individuals and households lack adequate financial knowledge and skills to make the appropriate saving and investment decisions facing complex of financial market (Lusardi and Mitchell, 2006; Lusardi and Mitchell,2008; Mitchell and Curto ,2010). Economic theory indicates that individuals and households are utility maximizers. They will make the trade-off between the costs and benefits to make the choice to help them realize this goal. Therefore, in concept, due to the opportunity cost, it may be more efficient for most individuals and households to get professional assistance in financial decision making. However, in reality, few individuals and households turned to the professional support. The 2009 National Consumer Survey conducted found two thirds of the respondents of the survey did not have the financial plan, among which only 38% involved the financial planning professionals in their financial planning (CFP Board, 2009). This situation seemed not to improve too much in the following years. According to the findings of 2012 Household Financial Planning Survey, only 31% respondents had their own or professional plans. The report also pointed out that the numbers actually did not change too much compared to 15 years ago (CFP Board, 2012). (Hanna,2011) found that there were only 22% households reported they used financial planners in the 1998-2007 Survey of Consumer Finances datasets, which was consistent with the results from previous surveys. Why people behave contradictorily to what the theory predicts? One of the possible reasons is that it may be challenging to precisely quantify the value of financial planning, thus making it difficult to reveal and analyze the benefit to the public (Hanna, 2010). Understanding the impact of financial planning on households' portfolio highlights the benefit of financial planning and the need for financial planning professionals. This study evaluates the impact of financial planning on households' portfolio performance. Using the data from the 2010 Survey of Consumer Finances, the findings lend empirical support to the belief that financial planning services delivered by professionals benefit the households in higher possibility of reaching better portfolio performance. The study also provides insights into other determinants of portfolio performance. It indicates that wealthy respondents with longer investment horizons were more likely to have better performed portfolios.Includes bibliographical references

Source of information and projected household investment portfolio performance

Postprint.Using modern information economics as the conceptual framework and data from the 2013 Survey of Consumer Finances, this study adopts a decomposition technique to explore the relationship between the primary information source used by U.S. investors and their household investment portfolio performance. The sample includes households with investable assets and those whose primary information source is financial planner or self-directed sources. Households that received large amounts of inheritance or gifts within the past year are excluded from this study due to the necessity of additional planning and the associated time commitment to accomplish it. The findings reveal that investors who consult with financial planners have a higher probability of achieving better household investment portfolio performance than self-directed investors. Results also show that household income and investor's gender mediated the effect of information source on investment portfolio performance. This study is one of the first to provide empirical evidence of a positive relationship between the service that U.S. financial planners provide and their clients' financial outcome.Includes bibliographical references

Factors related to making investment mistakes in a down market

Postprint.Using data from the 2008 FPA-Ameriprise Financial Value of Financial Planning Research Study, this study identifies the factors related to making investment mistakes by moving assets into more of a cash position in a down market while having an adequate level of emergency funds. The results show that investors who are male, Asian, wealthier, overconfident, loss-averse, and reported an understanding of financial risks are more likely to make such investment mistakes during a down market. These findings have important implications for investors, their advisors, and financial planning professionals in general.Includes bibliographical references

Study on structure -induced heat transfer capabilities of waterborne polyurethane membranes

Structural induced heat transfer capability of waterborne polyurethane (WPU) membrane was investigated. Hereby, WPU emulsions were synthesized with series of combinations of 2,4-Diisocyanatotoluene (TDI), poly(propylene glycol) (PPG), Poly(ethylene glycol) (PEG), dimethylolpropionic acid (DMPA) and ethylene glycol (EG) for studied membranes preparation. In this study, optimal prepolymer components, hard segment content, hydrophilic fragments and thermal annealing treatment on membrane-forming process were performed to study the structural features of WPU and corresponding heat conduction. Regarding to the results of AFM, XRD and DSC analysis, we found heat conduction was tightly related to the status of phase behaviors in studied WPU membranes. That's because phonon propagation as one primary heat carrier in polymer matrix was closely depended on the morphology of polymer chains. Good phase separation behavior could conduce to form long-range, short-range and microcrystalline ordering in WPU through intermolecular force (e.g. hydrogen bond), further pave as a conductive path for heat transmitting

Prior investment outcomes and stock investment in defined contribution plans

Postprint.In this study, we employ the 2001-2013 Survey of Consumer Finances to examine how prior investment outcomes affect portfolio allocation in defined contribution (DC) plans. Results show that investors with prior gains are more likely to invest all DC plan assets in stocks. Factors such as risk tolerance and investment horizon positively affect investors' tendency to allocate all DC assets to stocks. These findings have important implications for investors, researchers and financial professionals.Includes bibliographical references

Surface and Edge States in Topological Semi-metals

We study the topologically non-trivial semi-metals by means of the 6-band Kane model. Existence of surface states is explicitly demonstrated by calculating the LDOS on the material surface. In the strain free condition, surface states are divided into two parts in the energy spectrum, one part is in the direct gap, the other part including the crossing point of surface state Dirac cone is submerged in the valence band. We also show how uni-axial strain induces an insulating band gap and raises the crossing point from the valence band into the band gap, making the system a true topological insulator. We predict existence of helical edge states and spin Hall effect in the thin film topological semi-metals, which could be tested with future experiment. Disorder is found to significantly enhance the spin Hall effect in the valence band of the thin films

Buying high? : The house money effect on DC plan stock investment

Abstract only.Abstract only. As more and more employees are eligible for defined contribution (DC) plans as versus defined benefit (DB) plans, they have to shoulder the responsibility to manage their plan assets in order to achieve the desired consumption during retirement. With the well-known projections of the Social Security program and the longevity expectation of individuals, the retirement financial outlook for today's workforce is a concern. Portfolio allocation affects retirement wealth (Papke, 2004). When making portfolio allocation decisions, investors should focus on factors such as financial goals, risk and return of the portfolio, risk tolerance and investment horizon. "Buy low and sell high" is a simple concept. However, prior literature documented behaviors in ways contrary to this concept (Ciccone, 2011; Yao et al., 2013). Although several empirical studies have noted the effects of prior investment outcomes on investors' portfolio allocation decisions, very few studies focused on the influence of prior investment outcome on stock allocations in DC plans. Using the 2001-2013 Survey of Consumer Finances (SCF) datasets, this study fills in this research gap and examines how prior investment experience affects stock allocation in DC plans. Results show that compared with households with a prior loss and a non-positive economic expectation, those who had a prior gain were 1.9 times as likely to invest all DC plan assets in stocks. This confirmed the house money effect on stock investment in DC plans. This may help explain why some investors tend to "buy high" as opposed to following the simple "buy low and sell high" concept. Financial educators and financial fiduciaries should develop investment mechanisms and financial products to help investors avoid making investment mistakes and accumulate adequate retirement wealth.Includes bibliographical references