Financial Services Professionals Research Articles

Global Perspectives on Determinants of Older Adults’ Subjective Well-being: A Comprehensive Longitudinal Study

Current research has established a relationship between older adults' subjective well-being and factors extending beyond their economic status to encompass various non-monetary elements. While most studies in this domain focus on factors within a single country, our analysis utilizes international longitudinal surveys to explore older adults' well-being at both the national and global scale. This comprehensive analysis considers micro- and macro-level determinants of retirement well-being, revealing consistent variations in happiness levels across countries. Our study specifically suggests a compelling positively relationship between ago and subjective well-being within the United States. This finding presents a contrast with the negative association observed in European countries. Our global analysis further indicates a positive relationship between age and subjective well-being. This study not only contributes to greater understanding of the complexities related to aging and well-being but also provide significant implications for financial services professionals and public policymakers that aim to improve the well-being of elderly populations.

Unlocking Financial Well-Being for People With Disabilities: The Importance of Financial Knowledge and Socialization Within the Family Context

Improving the financial well-being of people with disabilities is a pressing concern, given the documented lower levels of financial well-being among this population compared to the general population. Limited research, however, offers effective strategies for improving their financial well-being. This study investigates how financial knowledge and family financial socialization can be combined to enhance the financial well-being of people with disabilities. Using data from the 2016 National Financial Well-Being Survey, we employ multivariate analyses and propensity score matching techniques to test the robustness of our results and ensure our population comprised a nationally representative sample of people with disabilities. Our findings show that people with disabilities experience lower levels of financial well-being compared to those without disabilities. Furthermore, we find that self-assessed financial knowledge and financial socialization within the family context are positively associated with the financial well-being of people with disabilities. These findings have important implications for researchers and financial service professionals who work with people with disabilities. This study emphasizes the importance of tailoring financial education to the specific needs of people with disabilities and prioritizing financial education and financial socialization within the family context as critical mechanisms for enhancing their financial well-being.

Review of the senior managers & certification regime

Following the 2022 Edinburgh Reforms, in which the Chancellor of the Exchequer announced a set of reforms designed to drive growth and competitiveness in the financial services sector, both HM Treasury and the Financial Conduct Authority (FCA) with the Prudential Regulation Authority initiated consultations to review the Senior Manager and Certification Regime (SM&CR). The aim of the review was to understand stakeholders’ views on how well the SM&CR is functioning and to identify ways to improve the regime to help it work better for firms and regulators. The SM&CR is seen as an essential tool to strengthen the financial services market by ensuring that financial services professionals are individually accountable to their employers and to the regulators. This article examines how the SM&CR has been operating to date and critically analyses whether it is achieving its original aims. The impact of the SM&CR on the international competitiveness of the UK financial services sector is considered, with comparisons drawn with the United States. Ultimately, this article recommends a greater use by the FCA of its enforcement powers to sanction senior managers, to ensure the international competitiveness of the UK financial services sector and to deter financial crime.

Engaging Robo-advisors in Financial Advisory Services: The Role of Psychological Comfort and Client Psychological Characteristics

Robo-advisor is an artificial intelligence (AI) driven professional financial service that suggests financial portfolios and offers personalised investment recommendations to clients. Since the services are high in credence properties where financial results only become manifest over time and clients typically have difficulty assessing outcomes even after consumption, client psychological comfort is vital for service adoption. Drawing on the unified theory of acceptance and use of technology (UTAUT), information economic theory and the self-service technology (SST) literature, this study investigates a mediating role of psychological comfort, antecedents of psychological comfort and possible boundary conditions. Thailand (an emerging economy with sophisticated financial systems) was selected as our research context. Data were collected through a mixed method approach involving in-depth interviews with investors followed by a structured survey administered to 548 current and potential investors. The findings revealed clients’ key psychological characteristics (performance expectations, suspicion of human financial advisors) and boundary conditions that drive psychological comfort. Performance expectations and suspicion of human advisors are associated with psychological comfort, which subsequently fosters intentions to use and percentage of investment through robo-advisors. Client confidence in ability to search for financial information and need for human interaction have small but distinct moderating effects. This study extends the SST adoption and AI-enabled professional service literature. It reveals psychological comfort as a key mediator between client psychological characteristics and robo-advisors usage.

Digital Transformation in the FinTech Sector

This paper mainly analyzed the specific application of fintech technology in different aspects, and the changes this emerging technology can bring to people's lives. In terms of the payment system, the formation of oligopoly may lead to serious uneven market competition. Although clients with personal advisers are less likely to trust the services of robots, robo-advice can provide better investment advice to ordinary people and expand the benefit group. For P2P lending, this is a new lending model, eliminating the tedious steps and high fees of the middleman. Virtual currency as an original application of blockchain is the financial derivative that threatened the financial money investment market. The author explained how to benefit more consumers through fintech technology, and the progress of technology enables customers of different classes to have better service experience. The digitalization process of financial services promotes economic development and can provide customers with more inclusive and professional financial services. Fintech has gradually changed the pattern of the financial industry, gradually weakened the role of financial intermediaries, and created a new operating system.

Life insurance beneficiaries - per capita vs. per stirpes: Is It really that clear?

Life insurance is a non-probate contract that allows for a gratuitous transfer of funds to designated beneficiaries who receive the payment at the death of the insured. Given the importance of life insurance to replace income or to create an inheritance for heirs, ambiguity regarding beneficiary advice can cause catastrophic results and unintended consequences, ultimately resulting in a failure to meet objectives. Source material available to financial services professionals and consumers is vague and easy to misinterpret, specifically the per capita beneficiary option. To provide consumer protection, we recommend that a consumer guide comparing various per capita options, as well as other beneficiary options, be distributed to potential policyowners at the time of application. The guide should include illustrative charts of how proceeds will be distributed. We also recommend that the beneficiary designation forms include clear and explicit definitions of various beneficiary options available to the insurance policy.

Abuse of enduring power of attorneys and real estate transactions in Australian courts

PurposeThe purpose of this study is to highlight how people acting as Enduring Power of Attorney (EPoA) abuse their privilege in relation to real estate transactions through analysis of five court cases. This study thereby provides insight into how and why adult children cross the line into the realm of misconduct.Design/methodology/approachThe approach involved a review of various court proceedings relating to elder financial abuse, and the synthesis of the important facts and judgements made that constitute unconscionable conduct, undue influence and passive acceptance of benefit. The cases selected focus on real estate transactions.FindingsThe research revealed some key commonalities and that property and living arrangements are the issues highly contested in courts for small estates.Practical implicationsThe case review provides some critical findings that are valuable for wealth management professionals or managing an ageing person’s care and living arrangements. It provides practical insights for the importance of independent legal and financial advice when entering real estate transactions. The findings also inform real estate agent practice in helping to reduce elder financial abuse through robust checks if an Attorney is acting on behalf of a Principal. The authors also support improving EPoA guidance and professionalization to assist Attorney’s to carry out their duties with appropriate care.Originality/valueA review of cases relating to EPoA in relation to real estate is novel and makes an important contribution to developing resources to educate Attorney’s and financial service professionals, including real estate agents.

Pathways to Individual Financial Well-Being: Conceptual Framework and Future Research Agenda

This conceptual article uses the theory of planned behaviour and the social comparison theory with an aim to propose an integrated conceptual model of individual financial well-being. The study helps to understand the process by which individuals acquire the skills required for responsible management of finance and achieve financial well-being. The present article synthesises findings from the existing literature and proposes an integrated conceptual model that incorporates financial knowledge, financial behaviours, financial attitude, financial social comparison and financial self-efficacy into a single financial well-being model. Besides this, one’s level of materialism, orientation towards future, level of conscientiousness and cultural values are identified as antecedents of financial attitude. Moreover, the gender perspective is also incorporated in the model, which provides valuable insights on the existence of wide gap in wealth accumulation as indicated by substantial research work. The study develops several propositions that may advance empirical research in financial well-being domain. The study also discusses practical implications for financial service professionals who can positively improve the ability of individuals in financial matters by emphasising the importance of psycho-social variables.

Good debt, bad debt: family debt portfolios and financial burdens

PurposeIn recent decades, research on consumer debt and well-being is emerging. However, research on the potential effect of debt portfolios on family financial well-being is limited. The purpose of this study is to fill this research gap by examining the potential effect of debt portfolios on family financial well-being, measured by three indicators of progressive financial burdens. These indicators include debt pressure (debt payment to income ratio >40%), debt delinquency (60+ days late for debt payments) and insolvency (total liability > total asset). Debt portfolios refer to various combinations of mortgage, credit card, vehicle, education and other loans.Design/methodology/approachWith data from the 2019 Survey of Consumer Finances in the USA, multivariate logistic regressions are used to identify specific debt types, consumer backgrounds and financial capability factors that are significantly associated with debt burden indicators. The findings are used to create a table demonstrating warning debt portfolios that may lead to undesirable financial outcomes.FindingsHoldings of different types of debts are associated with different financial burdens. Specifically, holdings of three types of debts (mortgage, vehicle and other debts) tend to increase debt pressure; holdings of two types of debts (education and other debts) tend to increase debt delinquency; and holdings of four types of debts (mortgage, credit card, education and other debts) tend to increase insolvency. These results are used to construct warning debt portfolios that show greater chances of undesirable financial outcomes. Among them, the top warning portfolio for debt pressure is the combined holding of mortgage-vehicle-other debts; for debt delinquency is the holding of education-other debts; and for insolvency is the holding of mortgage-credit card-education-other debts.Research limitations/implicationsThis study is limited by using only cross-sectional survey data to examine associations between debt portfolios and financial burdens. To examine the causality of debt portfolios on financial burdens, appropriate panel data are necessary, which is a direction for future research. In addition, this study used data from only one developed country. In future research, data from more countries, including both developed and developing countries, should be analyzed to verify if similar relationships exist among families in other countries.Practical implicationsResults of this study have implications for practitioners in banking and other financial institutions. The study presents a comprehensive list of debt portfolios in the order from high risk to low risk in terms of financial burdens. Banking and other financial service professionals can use the information to help their clients make informed borrowing decisions, predict their debt burdens and offer early preventions based on their clients' debt portfolios. Marketing strategists can use the information for effective segmentation and promotion purposes.Originality/valueThis study utilizes a new concept, debt portfolios and examines its associations with family financial burdens. Financial burdens include three indicators that are seldom used together in previous research. These indicators conceptually indicate various severity levels of debt burdens. This study also presents a conceptual discussion on the association between debt portfolios and financial burdens and provides a better understanding of consumer debt behavior and its consequences. The warning debt portfolios constructed based on the findings have direct managerial implications for banking and other financial service professionals.

Management Frameworks and Methods: Perspectives and Tools for Financial Service Professionals

ABSTRACT In this paper, we highlight theoretical frameworks and practical tools in the management literature, which offer valuable perspectives for financial service professionals. More specifically, we review the core logic related to the creation of competitive advantage, as well as the necessary foundations for the application of readily-available analytical tools such as data envelopment analysis (DEA). We then integrate these foundations with the financial services landscape so that financial service professionals can leverage their understanding in areas of stock selection, portfolio management, data analytics, and practice management.

The role of disappointment aversion and expectation proclivity in describing financial risk aversion among financial decision-makers

PurposeUsing data obtained from 525 individuals who were surveyed during early spring 2020, this study addressed three aims: (1) to ascertain the degree to which disappointment aversion and expectation proclivity are related; (2) to identify who is most likely to exhibit patterns of disappointment aversion; and (3) to determine to what extent the combination of disappointment aversion and expectation proclivity is associated with financial risk aversion.Design/methodology/approachSeveral analytic methods were used in this study. Descriptive statistics were calculated for each of the measures examined in this study. Correlation, analysis of variance (ANOVA) and regression techniques were used to estimate associations between and among the variables of interest in this study.FindingsA negative relationship between disappointment aversion and expectation proclivity was noted, which is counter to conventional thinking. It is traditionally thought that those who establish high expectations will experience the greatest disappointment when choice outcomes fall below expectations. In this study, it was determined that when a financial decision-maker consistently establishes high outcome expectations and results fall below expectations, the financial decision-maker feels less disappointment. More precisely, those who consistently establish high expectations tend to be more disappointment tolerant than others.Research limitations/implicationsThis paper provides evidence that categories of disappointment aversion and expectation proclivity are associated with financial risk aversion and certain demographic characteristics.Practical implicationsThis paper adds support for assertions made in the International Journal of Bank Marketing (IJBM) that it is important for financial service professionals and bankers to manage customer expectations to reduce disappointment with products and services. This paper shows that combinations of disappointment aversion and expectation proclivity are related to the financial risk aversion of customers.Social implicationsFindings from this paper indicate that a commonly used heuristic that decision-makers should reduce expectations to avoid disappointment may not be accurate or particularly useful in the context of financial decision-making.Originality/valueFindings from this study add to the existing body of literature by showing that aversion to disappointment and the establishment of expectations, while distinct concepts, are interrelated.

Data-Sharing Frameworks In Financial Services: Discussing Open Banking Regulation for Canada

Data-sharing frameworks in financial services are becoming increasingly prevalent with the potential to shape drastically the future of banking and finance. As data assets are of strategic importance to financial institutions and central to their ‘datafication’ and digital transformation processes, sharing and accessing new data can alter the dynamics of competition and lead to the emergence of new players as well as nascent markets. Innovative technologies such as application programming interfaces (APIs) can help simplify data communication between systems and thus standardize the exchange of information between organizations allowing them to experiment with new, more open, business models. APIs also give the ability to effectively control openness and orchestrate ecosystems of third-parties that can add value to organizations’ supply chain and end users. Having said that, the deployment of open APIs in financial services raises numerous questions regarding the appropriate regulatory (or not) framework and infrastructure for opening up data in the banking sector. The current paper examines the potential for an open banking framework in the Canadian market and makes an effort to identify the regulatory, economic, technological, sociological, and political debates in the industry concerning data openness. During the course of the study there was consensus from participants that discussing the “merits of open banking” or opportunities that it will bring is an outdated topic and instead the discussions should focus on the real issues and ‘pain-points’ around open banking implementation in Canada. Following a good number of interviews with FinTechs, challenger and incumbent banks, regulators, legal experts, consultants, and financial services professionals (in various part of the business as well as IT) in the Canadian market, the paper outlines a number of themes and frictions that the industry as well as policy-makers in Canada should consider when implementing an open banking framework. We believe that the findings can be generalized and be useful for practitioners and regulators around the world when exploring similar frameworks. The paper starts with an introduction to data-sharing and open finance providing some workable definitions and comparing the relevant technologies in place. In this section we also clear various misunderstandings around ‘open banking’. The following section provides a brief description of the most popular open banking paradigms around the world: UK, EU, and Australia before we move to the Canadian context. The main findings section is organized in four parts discussing a) the objectives of open banking in Canada and whether a potential scheme should be policy-mandated or market-driven, b) the relevant regulatory issues such as liability and related data-privacy laws, c) the key debates and tensions when designing the data-sharing infrastructure (such as data openness, digital identity, security, API and data standards), and finally d) the relevant concerns and participant goals around identification of third-parties and access to the national payments infrastructure. The paper concludes with some insights from previous research on the impact of open banking on the market structure and business models in banking.

Artificial Intelligence in the Banking Sector – A Critical Analysis

“Computers will overtake humans with AI in the next 100 years. When that happens, we need to make sure the computers have goals aligned with ours.” The pros and cons of AI is evident in this statement made by Stephen Hawking.The last decade had witnessed tremendous changes in how each industry functions. The rapid growth of technology, internet and infrastructure has fuelled this disruption at a 10X speed.Talk of the town in digital disruption is Artificial Intelligence. Number of mentions of AI or Machine Learning in earning calls by public company executives shows an exponentially rising trend since 2015 as per the data by CBInsights. AI has brought in groundbreaking changes in the global banking industry. The future of AI in banking is enormous as the power of advanced data analytics can combat fraudulent bank transactions and improve compliance. AI technologies reduce costs in the banking sector by increasing productivity. According to Open Text survey of financial services professionals, 80% of banks are highly aware about the potential benefits that AI can bring to the business. What are the potential benefits of AI in financial institutions? Does adopting AI come with risks and costs? What are the regulatory constraints which could be the impediments for implementing AI in the Banking sector? This conceptual paper deals with risks, rewards, use cases and ways to adopt AI in the banking sector. This article also tries to identify the paybacks and also the key uses of some of the tools which are used by both financial institutions and central banks. It also indicates the main constraints of the technology and its likely consequences for the correct functioning of the financial system.

Mediation between financial risk tolerance and equity ownership: assessing the role of financial knowledge underconfidence

Investing in equity is not an easy task. People with varying levels of financial risk tolerance would demonstrate a different level of equity investment. However, investors' tendency to underestimate their financial knowledge is likely to mediate the association between financial risk tolerance and equity ownership since people tend to underestimate their knowledge and take a lower risk when the task is hard to execute. The purpose of the study is to evaluate the mediating role of underconfidence on the association between financial risk tolerance and equity ownership. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) were used to evaluate the conceptual model. The results show that it is possible to assess underconfidence using objective and subjective financial knowledge, and underconfidence has a significant mediating effect between financial risk tolerance and equity ownership. Although it is challenging to change a person’s risk tolerance, financial services professionals may help their clients by addressing underconfidence.

Examining the criterion-related validity evidence of LinkedIn profile elements in an applied sample

As social media use has grown over the past decade, both academics and practitioners have increasingly debated the appropriateness of using data from social networking sites in hiring contexts. Although the use of social media in recruitment and staffing processes has become commonplace, a corresponding increase in empirical investigations of this practice has not been achieved. Now more than ever, industrial-organizational (I–O) psychologists and data scientists are well positioned to offer evidence-based insights regarding this common practice. Despite being the most widely used professional social networking site, validity evidence of the relationship between LinkedIn profile elements and organizationally relevant criteria remains equivocal, and researchers have specifically called for more work on LinkedIn as the basis for social media assessments. Using a field sample of financial services professionals, the present study seeks to examine the criterion-related validity of LinkedIn incumbents' professional profiles (n = 486) using objective sales performance metrics. In addition to potential privacy and ethical concerns, and with few exceptions, the results largely suggest that LinkedIn profile characteristics are not strongly correlated with organizational metrics. Potential uses, recommendations, and limitations based on the criterion-related evidence are discussed herein.

Exploring the dark side of third-party certification effect in B2B relationships: A professional financial services perspective

This paper extends the growing research on the dark side of B2B relationships by exploring the differences in third-party certification effects based on social capital with professional financial services firms, using a proprietary dataset with confidential voting records of the nominations for Investor Relation Awards in Hong Kong. Results confirm the dark side of these relationships by showing that the nominated firms with more favorable voting from international (vs. local) analysts experience stronger certification effect with higher valuations upon announcement. Moreover, nominated (but not awarded) firms with lower levels of information transparency demonstrate a larger certification effect but they also show significant improvement in their information transparency after the event, which represents an unexpected bright outcome from this dark side of B2B relationships. Overall, these findings extend the social capital argument that international financial services firms bring higher positive return through the support of their own professional and social network.

Exploring Customer Participation and Value

Emerging marketing perspectives show that customer participation creates new opportunities for value creation. A perspective in the marketing section should be highlighted, a new opportunity must be emphasized, and customer participation should be used as a means to define the relationship benefits through their participation. The goal of customer participation is to create a high-value service process by creating cooperation with customers. This study describes and develops hypothesis verification. In the context of professional financial services in Taiwan, this study explores the effect of customer participation on value creation and satisfaction from customer and employee perspectives. It also analyzes the effects of different customer capabilities and employees’ emotional intelligence. The source of data collection is a total of 383 customer questionnaires from domestic financial institutions of two types of bank (public and private) to verify (1) how customer participation affects customer satisfaction and employee job satisfaction through relationship value creation, (2) how customer ability affects the relationship between value creation and satisfaction, and (3) how employees’ emotional intelligence affects the relationship between relationship value creation and job satisfaction. This study uses the structural equation model to verify the research hypothesis and obtains the following results through empirical research: 1. Customer participation affects customer satisfaction through relationship value creation. 2. Customer participation does not completely create positive employee relationship value, which may increase work pressure. 3. Interference results show that customer ability can promote customer satisfaction, whereas employee emotional intelligence does not necessarily affect the relationship between employee relationship value creation and job satisfaction. These results contribute to the banking industry. Customer participation can promote value creation by arranging customers and financial specialists to have an appropriate interactive relationship and professional services

Gamestonk: What Happened and What to Do about It

The price of GameStop stock exploded from $18.84 at the end of 2020 to a high of $483 on January 28, 2021, before collapsing to under $60 in early February. The stock had long been heavily shorted even before the pandemic. A stock bubble and its collapse inflict collateral damage even on those not participating in the bubble, including index-fund investors. The incident raises questions about the duties of brokers and financial service professionals in the age of social media, and the role of payment for order flow (PFOF). The price dislocation in GameStop highlights several leaks in the plumbing of the US equity market that need to be plugged or else similar dislocations will happen again. The antiquated T+2 settlement cycle needs to be shortened to reduce risk and attendant collateral needs in the system. Institutional short positions should be disclosed on SEC Form 13F just as long positions are. The frequency of short interest disclosure should be increased to daily from the current biweekly. The SEC should implement the Congressional mandate in Dodd-Frank §894 to increase transparency in the stock lending market by implementing a ticker tape for stock lending transactions. Short positions should be marked to market yearly for tax purposes yearly to eliminate the tax incentive to delay covering short positions. SEC rules 204 and 15c3-3 need to be modernized to help prevent spikes in prices far beyond any reasonable levels. Rule 606 should be extended to require brokers to report retail execution quality.

Do CFP® professionals engage in less misconduct? Exploring the importance of job classification when comparing misconduct rates among financial service professionals

ABSTRACT Using a unique dataset of FINRA-licenced individuals in Florida in 2015 that was enriched to include job classification information generally not contained in publicly-available regulatory data, a series of binary logistic regressions illustrate how unobserved differences among financial service professional roles may bias results in misconduct analyses. When using CFP® status as the sole predictor of misconduct among the full sample of licenced individuals, CFP® professionals are found to have 1.86 times higher odds of having engaged in culpable advisory-related misconduct compared to non-CFP® professionals. However, after controlling for other relevant factors and limiting the sample to only individuals identified as financial advisors, CFP® professionals are found to have 0.84 times lower odds of having engaged in culpable advisory-related misconduct. Because job classifications are generally not available in the standard SEC and FINRA datasets, these findings illustrate how the inability to control for unobserved differences in job roles may bias misconduct analyses.

Accounting and the US cannabis industry: federal financial regulations and the perspectives of Certified Public Accountants and cannabis businesses owners

BackgroundCannabis-related businesses (CRBs), in states where cannabis is legal, may be unable to obtain professional financial services including banking, insurance, and accounting because of federal laws and regulations. This qualitative study investigated the following research questions.Why are some Certified Public Accountants unwilling to provide services to cannabis-related businesses?How do CRBs compensate for lack of Certified Public Accountant services?What does a certified public accountant need to know about the cannabis industry prior to engaging to provide services to CRBs?MethodsData for this grounded-theory qualitative study was gathered from twenty-three semi-structured phone and face-to-face interviews. Ten cannabis-related business owners were recruited from a convenience sample after attempting a broad recruiting effort. Thirteen Certified Public Accountants with active licenses in Colorado or Washington State participated from firms of varying size and willingness to serve the cannabis industry. The individual interviews, which lasted from twenty minutes to more than an hour, focused on the participants’ perceptions of the complexities of accounting and tax compliance for cannabis businesses.ResultsEight of the thirteen Certified Public Accountants interviewed would not provide services to the cannabis industry with the primary reason given that cannabis is federally illegal. All ten of the cannabis business owners interviewed indicated they engage a Certified Public Accountant to provide tax services. Seven out of ten CRB participants and ten of the thirteen Certified Public Accountant participants indicated that extensive industry knowledge is needed for an accountant to competently provide services to a CRB.ConclusionsCRB owners need to carefully consider the industry knowledge and experience of a potential Certified Public Accountant prior to engaging them. This study shows that US Certified Public Accountants should weigh the risk of federal prosecution and potential loss of the Certified Public Accountant license when deciding whether to serve a CRB client. The study also found that a Certified Public Accountant must commit to acquiring and maintaining substantial specialized knowledge related to tax Code Section 280E, internal controls for a cash-only or cash-intensive business, and the workings of the cannabis industry under the current regulatory conditions.