Financial Services Professionals Research Articles

Financial-related psychological factors affect life satisfaction of farmers

Abstract Farmers as individual financial decision-makers can be better identified as those under the greater responsibility of managing multi-faceted stressful situations in both family and farm management. With using 1044 random sampling survey method, this study investigates how financial stress, financial risk tolerance, locus of control, and financial self-efficacy are associated with the life satisfaction of farmers. By investigating the farmer's financial stress and finance-related psychological factors on their life satisfaction, this study has a purpose to inform financial services professionals, such as financial planners and advisors, of how to better serve a population in the farmland industries. Our findings showed that: (a)_ financial stress decreases the life satisfaction, but farmers show lower maringal effect than the non-farmers; (b) locus of control increases the life satisfaction, but the farmers show smaller marginal effect than non-farmers, and (c) demographic factors show different maringal effects among non-famrers and farmers (i.e., age, education, gender). Overall, identification of themselves as a farmer eased the negative relationship between financial stress and life satisfaction but reduced the positive relationship between locus of control and life satisfaction.

Information Search, Financial Advice Use, and Consumer Financial Behavior

This study develops a conceptual framework to investigate the relationship between households' information search behavior and financial management outcomes. Consumers' information search behavior is examined from both internal and external perspectives. The internal information sources include human capital and psychological and attitudinal factors, whereas the external information sources comprise financial professionals from different financial service areas. Financial management behaviors examined in this study consist of consumers' savings and credit-using behavior. This study uses the 2012 National Financial Capability Study and structural equation modeling methodology. The results suggest that (a) both internal and external information sources used by consumers are significantly associated with savings and credit-using behavior, and (b) seeking external financial advice from professionals mediates the relationship between consumers' internal sources and financial management outcomes. The findings of this study provide practical implications for financial professionals when counseling and communicating with clients and challenge policymakers to develop pathways that can enhance the quality and accessibility of internal and external information sources for clients, including customized financial education programs and affordable professional financial services.

Debt types and burdens by family structures

PurposeThe purpose of this study was to examine family structure differences in debt types and burdens of American families.Design/methodology/approachData was from the 2016 Survey of Consumer Finances. Eight types of family structures, five specific debts, and two debt burden indicators are examined with multivariate logistic regressions.FindingsAfter controlling for several socioeconomic variables, multivariate logistic regression results show that married with children families are more likely than five other family types to have any debt. In terms of specific debt, married with children families are more likely than six other types of families to have mortgages, four other types to have credit card loans, five other types to have to vehicle loans, three other types to have education loans, and one other type to have purchase loans. Married with children families are more likely than three other types of families (childless married couples, single males, and single females) to be late in debt payment for 60 or more days.Research limitations/implicationsThe data is limited to one-year cross-sectional data. To gain more insights on this topic, panel data could be used.Practical implicationsThe findings can be used for financial service professionals to identify loan demand and risk associated with various family structures and develop effective marketing strategies to serve these clients.Social implicationsThe findings are informative for public policymakers to develop family friendly economic policies and for consumer educators who help consumers make effective financial decisions when borrowing various types of loans.Originality/valueFirst, this study uses an innovative definition of family structure that counts several nontraditional family structures. Second, this study examines family structure differences in holdings of five specific debts together.

Beyond placement, layering and integration – the perception of trade-based money laundering risk in UK financial services

PurposeThe purpose of this study was to investigate the perception of trade-based money laundering in Letters of Credit (“L/C”) transactions among trade finance practitioners in the UK banking sector and to compare it to the perception of the same risk by the Financial Conduct Authority (“FCA”), the regulator of the UK’s banking sector.Design/methodologyA survey was used to carry out research among financial services professionals engaged in trade finance in the UK.FindingsThis paper contributes to the existing literature in a number of ways. First, it investigates the perception of trade-based money laundering risk from the perspective of financial services professionals, which has not previously been done. Second, it argues that the perception of trade-based money laundering in financial services is overly focussed on placement, layering and integration, and that the full extent of the offence under the Proceeds of Crime Act 2002 is less well known. It further found that financial services firms need to improve their understanding of the nature of trade-based money laundering under UK law.Practical implicationsThis study argues that the financial services sector’s perception of trade-based money laundering risk in trade finance is underdeveloped and makes suggestions on how to improve it.Originality/valueIt provided unique insight into the perception of trade-based money laundering risk among financial services professionals.

The need for speed: A platform-based approach to digitisation

The move to the platform economy, also known as platformification, is now a commonplace discussion for financial services professionals. Harnessing the resources of application programming interfaces and the cloud is part of day-to-day conversations, and senior banking executives are only too aware of the need to update skills and technologies to survive and thrive in this new landscape. This paper examines the drivers, opportunities and barriers to the adoption of a platform approach. Disruption is already here. Those banks that have not yet woken up and smelled the coffee — or are dragging their feet when it comes to business transformation — are at greatest risk.

The Value of Financial Designations: A Consumer Perspective

Throughout their lifetimes, consumers use financial service professionals (FSPs) to achieve important financial goals and ensure financial wellbeing, often turning to FSPs as their levels of income and investable assets necessitate professional guidance. This study evaluates the impact of consumer perceptions of advisors' financial designations/credentials on rate of compensation to the FSP when controlling for consumer age, income, and investable assets. It further evaluates the impact of consumer perceptions of advisors' financial designations/credentials on consumers' perceived value received when controlling for consumer age, income, and investable assets. Using data from Advisor Impact's 2014 Economics of Loyalty Research survey, this study finds that consumers who value designations, as well as those with higher incomes and investable assets, pay advisors more than those who do not. The study also finds that consumers in older age groups tend to pay less to their advisors than the youngest age group, possibly indicating less of a need for financial advice. As a potential explanation for why those who value designations tend to pay more to their FSPs, the results regarding the perception of value received suggest that consumers who value designations also perceive greater value in return for the fees paid to their FSP. For advisors, these results provide support for the acquisition of designations as a means for greater perceived value on behalf of the consumer, and ultimately, higher levels of compensation.

Blockchain and Cryptocurrencies – Considerations for Treatment and Reporting for Financial Services Professionals

The rise and continued implementation of cryptocurrencies and other cryptoassets is having, and will continue to have, a disruptive impact on the accounting, federal income taxation, and broader financial services industries. Much has been written, researched, and discussed about both cryptocurrencies and the underlying blockchain technology, but uncertainty remains as it pertains to how these items should be reported for accounting and tax purposes. What this research attempts to accomplish, through both a review of the literature and publicly available guidance issued by tax and accounting authorities, is to document and analyze what current guidance represents for financial reporting. Additionally, this research proposes how future iterations of cryptoassets and cryptocurrencies might be reported, with recommendations applicable for both practitioners and academics seeking to expand on this work.

Financial Fraud Among Older Americans: Evidence and Implications.

The consequences of poor financial capability at older ages are serious and include making mistakes with credit, spending retirement assets too quickly, and being defrauded by financial predators. Because older persons are at or past the peak of their wealth accumulation, they are often the targets of fraud. Our project analyzes a module we developed and fielded on people aged 50 an older years in the 2016 Health and Retirement Study (HRS). Using this data set, we evaluated the incidence and prospective risk factors (measured in 2010) for investment fraud and prize/lottery fraud using logistic regression (N = 1,220). Relatively few HRS respondents mentioned any single form of fraud over the prior 5 years, but 5.0% reported at least one form of investment fraud and 4.4% recounted prize/lottery fraud. Greater wealth (nonhousing) was associated with investment fraud, whereas lower housing wealth and symptoms of depression were associated with prize/lottery fraud. Hispanics were significantly less likely to report either type of fraud. Other suspected risk factors-low social integration and financial literacy-were not significant. Fraud is a complex phenomenon and no single factor uniquely predicts victimization across different types, even within the category of investment fraud. Prevention programs should educate consumers about various types of fraud and increase awareness among financial services professionals.

Should Financial Gatekeepers be Publicly Traded?

We investigate how a broker firm’s initial public offering (IPO) affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first 2 to 3 years after their employers’ IPO than before the IPO. The increase in the recommendation bias is greater among analysts of affiliated brokers and brokers that raise additional capital after their IPO than among other analysts. Newly listed broker firms experience significant increases in revenue and trading commission, and the increases are positively related to recommendation bias, after controlling for many other factors. More importantly, recommendation bias decreases as newly listed broker firms season and as the importance of trading commission declines. This suggests that public exposure through a broker firm’s IPO does not enhance the integrity and professional conduct of its financial analysts. Rather, economic incentives make financial analysts more accepting of unethical behavior. The overall results imply that the public trading of financial gatekeepers compromises the ethical relationship between financial service professionals and society in general.

Conflicts of interest in finance

Purpose Relying on research from social psychology and business ethics, this paper aims to argue that the current massive regulatory regime surrounding the attempts to curb what is perceived to be damaging conflicts of interests in the financial industry is based on misguided assumptions, and that the trend of increasingly detailed rule-making, supervision and sanctioning in this area might be counter-effective. This should cause financial services legislators and regulators to be cautious when proposing more detailed rules as solutions to perceived problems. The paper argues that disclosure is no remedy for a harmful conflict of interest, and that such an obligation can only be based on the client’s right to know about the conflict. This right, however, does not, in itself, justify all the extensive and detailed regulation in the area. The paper ends with a recommendation for more research into the moral reasoning ability of financial services professionals, as well as the interplay between judgment and rules in the finance industry. Design/methodology/approach The paper relies on research within behavioural moral psychology, and applies it to business ethics with the aim of discussing the impact of regulation on moral reasoning within the finance industry. Findings Regulation might lead to a decrease in moral reasoning, which is the premise of proper handling of conflicts of interest. Additionally, disclosure of unavoidable conflicts of interest might even strengthen the negative consequences of such conflicts. Research limitations/implications More research should be conducted within the financial services sector about the effect of regulation on individual judgment. Practical implications The paper proposes that care should be exercised when proposing increased and complex regulation to avoid unintended and adverse consequences for the financial services industry. Originality/value The paper synthesises existing research within different fields – such as moral psychology and analytic business ethics – and applies it to financial regulation.

Risk management behaviour in banking

PurposeRisk management is now considered the responsibility of all financial services professionals, not just senior leaders or risk specialists. Very little is known about the role of staff in risk management, so the purpose of this paper is to, first, clarify what constitutes “desirable” risk management behaviour by financial services staff based on the practitioner and regulatory literature. Based on this understanding, the authors analyse the characteristics of those who are most likely to display such behaviour.Design/methodology/approachThe paper analyses some 36,000 survey responses across ten banks headquartered in Anglo countries.FindingsDesirable risk management behaviour at the employee level includes compliance but goes well beyond mere compliance to include speaking up, thoughtful engagement with and accountability for the risk management framework. The authors find a significant negative association between individual risk tolerance and desirable risk management behaviour. Older workers as well as those with greater seniority are more likely to report desirable risk management behaviour. The link between female gender and risk management behaviour is not supported after controlling for individual risk attitudes. The authors provide evidence that females who succeed in financial services do not conform to traditional female stereotypes.Practical implicationsFindings suggest financial institutions should hire/retain more older workers and those with lower risk tolerance to improve risk management. Hiring more females, however, is not likely to lead to better risk management.Originality/valueThe paper is the first to investigate risk management behaviour in financial services staff. The research exploits a unique, difficult to obtain data set.

A model of protecting financial service clients in the UK

Aim: The purpose of the paper is to describe changes occurring in the UK in consequence of the financial crisis with regard to protecting financial service customers, which prompts towards the answer to the question about the optimum protection model when it comes to protecting financial market customers. The author analyses whether regulations in use in the UK are sufficient to ensure cohesion between the public supervision of the financial market and customer protection. In practice, these value may be in opposition. Design / Research methods: The basic research method used in the paper is analysing sources of law and the literature of the subject. Conclusions: The most recent financial market crises undermined the assumption that public and legal supervision is a sufficient tool preventing market turbulences. The financial market supervision should expand beyond professional financial service providers. At the same time, it is also necessary to ensure customer protection. Having conducted the research, the Author recognises that the model used to supervise the financial market and protect financial service customers adopted in the UK deserves to be multiplied on the basis of Polish law, with a particular focus on transferring the supervisory function to the central bank. Originality / value of the article: The topic is pertinent and important as, in the EU member states, adaptation of new legal solutions in the area of financial supervision is considered. However, the problem tackled in the paper has not received any wider coverage in the literature of the subject. The UK regulations may and, according to the author - should serve as a model for the Polish legislator who is planning to challenge the issue of organising supervision over the Polish financial market in the near future.

Should Financial Gatekeepers Be Publicly Traded?

We investigate how a broker firm’s initial public offering (IPO) affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first two to three years after their employers’ IPO than before the IPO. The increase in the recommendation bias is greater among analysts of affiliated brokers and brokers that raise additional capital after their IPO than among other analysts. Newly listed broker firms experience significant increases in revenue and trading commission, and the increases are positively related to recommendation bias, after controlling for many other factors. More importantly, recommendation bias decreases as newly listed broker firms season and as the importance of trading commission declines. This suggests that public exposure through a broker firm’s IPO does not enhance the integrity and professional conduct of its financial analysts. Rather, economic incentives make financial analysts more accepting of unethical behavior. The overall results imply that the public trading of financial gatekeepers compromises the ethical relationship between financial service professionals and society in general.

The Impact of Financial Services Globalisation on Islamic and Conventional Bank Performance in GCC and MENA Countries

Empirical researches have shown that Islamic banks were more efficient than the conventional banks before, during and after global financial crises and were more resilient to negative profitability and speculation commonly identified with conventional banks despite that the former have grown as a result of globalisation of financial markets, product innovation, and delimitation of financial regulations, among others. However, the analyses of globalisation or internationalisation of financial services have concentrated only on the cross-border flow of portfolio investment in country stock markets, ignoring foreign direct investment and movement of financial services professionals. Using panel regressions to analyse the impact of financial services globalisation, the paper finds that net capital account used to measure the phenomenon has no significant impact on Islamic banks’ performance measured in terms of return on equity, return on asset and profit before tax. This may be due to the oft-cited limited patronage for Islamic banking in general. The policy implication suggests the need for an increased drive to popularise Islamic banking products in non-Islamic countries and for Islamic banks to more actively engage in cross-border trade of Islamic banking services as well as foreign direct investment in subsidiary banks outside their traditional locations. Key words: Financial services, globalisation, Islamic banks, GCC and MENA JEL Classification: G21, G24, G15

Consumers of Financial Advice in New Zealand

ABSTRACT This study examines some key client-adviser characteristics within the New Zealand financial planning landscape. Through an online survey, participants were asked about their choice of financial adviser, their experience of financial advice and their view of the 2008 Financial Advisers Act. Descriptive results reveal a lack of knowledge in differentiating between the types of advisers and each adviser’s scope of service. Clients of financial advisers who adhere to minimum education standards are significantly different from clients who contract the services of advisers without set standards. Implications include adopting a nationwide marketing campaign and significant regulatory changes to help all consumers identify appropriate financial service professionals for their needs.

Customer Intention to Save for Retirement Using a Professional Financial Services Planner

ABSTRACT This paper presents the results of an investigation into the factors that determine the intention to save for retirement using a professional financial services planner. The sample of 289 individuals aged between 30-65 years in Australia revealed that self-efficacy and attitudes are the main factors that cause a consumer to save for retirement, using the services of a financial planner and/or accountant. Structural equation modelling (SEM) analysis indicated that subjective knowledge and goal clarity have a negligible effect on behavioural intentions in this context. Furthermore, it was found that goal clarity, subjective knowledge and perceived risk did not have a direct impact on behavioural intentions. With 57 per cent of the variance explained, these results are considered robust. Finally, a number of opportunities for further research are outlined.

Item response theory analysis of the Lichtenberg Financial Decision Screening Scale

ABSTRACTThe focus of these analyses was to examine the psychometric properties of the Lichtenberg Financial Decision Screening Scale (LFDSS). The purpose of the screen was to evaluate the decisional abilities and vulnerability to exploitation of older adults. Adults aged 60 and over were interviewed by social, legal, financial, or health services professionals who underwent in-person training on the administration and scoring of the scale. Professionals provided a rating of the decision-making abilities of the older adult. The analytic sample included 213 individuals with an average age of 76.9 (SD = 10.1). The majority (57%) were female. Data were analyzed using item response theory (IRT) methodology. The results supported the unidimensionality of the item set. Several IRT models were tested. Ten ordinal and binary items evidenced a slightly higher reliability estimate (0.85) than other versions and better coverage in terms of the range of reliable measurement across the continuum of financial incapacity.

Why Some People Just “Can’t Get No Satisfaction”: Secure versus Insecure Attachment Styles Affect One’s “Style of Being in the Social World”

We first seek to explore the relationship between attachment styles of professional financial service customers and their ability to experience customer satisfaction and build relationships with a commercial bank. Secure attached people identify with the commercial bank, feel satisfied and are loyal with the commercial bank. Second, we question whether attachment styles and degrees of satisfaction are also reflected in a capacity to feel pleasure in attachments to luxury products, feel happiness and pro-activeness, develop positive relationships with others, and sleep well for multiple samples of non-commercial customers. Apparently, secure attached people form enjoyable attachments with luxury goods/brands. Equally, in life in general they show a proactive attitude and generosity toward others, and feel low envy. Anxious attachment style relates negatively with appraisal of and relationship formation with commercial banks, negatively with enjoyment and attachment to luxury goods, and negatively with generosity towards people and happiness. In addition, anxious attachment style relates positively with envy towards people and low sleep quality. Avoidant attachment style does not relate with any of the above variables except for a negative association with happiness with life in general. Finally, none of the attachment styles scales relates with the BIS-BAS scale, except that anxious attachment relates with the BIS scale, indicating largely that the attachment system does not function as an approach-avoidance system but helps in homeostatic regulation of stress due to the experience of quiescence with others. By studying how attachment styles affect people in commercial and general social domains we hope to pave the way for further exploration of the fundamental mechanisms that drive secure attached people as opposed to insecure attached people to generally experience positive emotions and outcomes in life. We tentatively suggest that compared to insecure attached people, secure attached people possess a different “style of being in the social world.”

IMPACT OF PROFIT-LOSS SHARING FINANCING ON POVERTY ALLEVIATION OF SHRIMP FARMERS IN TULANG BAWANG REGENCY (CASE STUDY: KEMITRAAN BUMIDIPA)

This research aimed to describe the core values of Kemitraan Bumidipa as sharia microfinance program that applies profit-loss sharing scheme, to elaborate the main obstacles that might cause the failure of the program, to analyze the effectivity of its financing, and to analyze the impact of financing on poverty alleviation of shrimp farmers in Rawajitu Timur District, Tulang Bawang Regency. Descriptive analysis, qualitative analysis and poverty indices are used as the analysis methods. The result shows that, on the one hand, the core values of Kemitraan Bumidipa are the real profit sharing system, professional financial services, and the investment guarantee model for its financing. On the other hand, the risks faced by the program are the the unstable environment of shrimp farming, technical problems, the shrimp’s price fluctuation, and moral hazard behavior. According to effectivity analysis, overall this program has been effective. Based on poverty indices result, sen index of farmers increase after becoming members of Kemitraan Bumidipa as the result of the failure of farmers’ cultivation. As recommendation, it should be a supervision mechanism to prevent the members from moral hazard act and it’s neccessary for further research particularly related to the unstable environment of shrimp farming and the fluctuation of shrimp’s price.

Legal Study on the Provision of Financial Services Professionals and the Policy Implication for Korea - Based on the UK Financial Services and Markets Act Systems -

Legal Study on the Provision of Financial Services Professionals and the Policy Implication for Korea - Based on the UK Financial Services and Markets Act Systems -