Financial Services Review: The Journal of Individual Financial Management

A Dynamic Analysis of the Impact of Household Portfolio Allocation Decisions on the Demand for Life Insurance

Ning Wang, Yiling Deng, Ruohan Wu — Fri, 22 Mar 2024 00:00:00 -0400

Prior research on the demand for life insurance in household portfolio holdings has not made a clear distinction between portfolio shifts resulting from active allocation decisions and those resulting from passive acceptance. Our study examines the relationship between household portfolio allocation decisions and the demand for life insurance in a dynamic setting, using panel data before and after the 2008 financial crisis. The study provides the first evidence that household decisions to invest in cash and cash equivalents, bonds, retirement assets, and pay off debts significantly affect life insurance ownership.

Altruistic Bequests: Giving Motive and Receipt Expectation Using the 2019 Survey of Consumer Finances

Jason Anderson, Stuart Heckman, Jeffrey Furlong — Fri, 22 Mar 2024 00:00:00 -0400

This study uses Altruistic Bequest Theory to update research by Kao et al. (1997) exploring the factors driving the giving and receiving of bequests using data collected from the 2019 Survey of Consumer Finances (SCF). Altruistic variables demonstrated significant, although at times weak, relationships across the three categories of the analysis (bequest versus no bequest, bequest versus maybe bequest, maybe bequest versus no bequest). Alternatively, results show economic, attitudinal, and sociodemographic variables as the main drivers for the giving and receiving of bequests.

How Are You Doing? Financial Well-being During COVID-19

Danah Jeong, Benjamin Hampton, Kristy Archuleta — Fri, 22 Mar 2024 00:00:00 -0400

Optimal financial well-being is a goal for both financial professionals and consumers. The COVID-19 pandemic raised concerns about consumers’ financial well-being. This study sought to explore the factors related to financial well-being using the Personal Financial Wellness framework (Joo, 2008). Data was collected from a diverse sample during the COVID-19 pandemic. Results indicated that objective financial status (e.g., income), positive pre-pandemic financial behaviors, financial satisfaction, and being older and single mattered in one’s increased level of financial well-being during the COVID-19 pandemic. Subsequently, financial satisfaction was found to be a mediating factor between subjective financial knowledge and financial well-being. Implications for financial professionals, researchers, and policymakers are provided.

Performance Evaluation Disagreement

Stéphane Chrétien, Manel Kammoun — Fri, 22 Mar 2024 00:00:00 -0400

This paper studies investor disagreement in the performance evaluation of equity mutual funds by comparing two existing approaches and estimating its relations with fund characteristics, active management level and fund flows. We find that investors disagree more about the performance of funds that have higher expense ratio and turnover, lower manager tenure and dividend yield, and that are older, smaller and part of a larger family. Disagreement is also higher for funds that follow riskier investment style strategies and deviate more from their benchmarks. Finally, larger disagreement leads to more net fund flows. These findings suggest that heterogeneous investors do not value funds with aggressive active trading strategies similarly, and that favorable valuations by some clienteles result in positive demands for this type of management.

Volume 32 Issue 1 Masthead

John Grable — Fri, 22 Mar 2024 00:00:00 -0400

From the Editor

John Grable — Fri, 22 Mar 2024 00:00:00 -0400

CE Quiz

John Grable — Fri, 22 Mar 2024 00:00:00 -0400