From February 20th through February 22nd, the CFP Board’s Center for Financial Planning hosted its third annual Academic Research Colloquium (ARC) for Financial Planning and Related Disciplines in Arlington, VA, to share and discuss research relevant to the financial planning profession.
This year’s event saw a sharp decline in attendance, down about 35% from 2019 (150 attendees in 2020, of which about 20 were practitioners), likely attributable to the fact that this year’s ARC was held separately from the CFP Board’s Registered Programs Conference (RPC), which is required to be attended by program directors of CFP-registered financial planning education programs. While this decline was unfortunate and definitely impacted the overall atmosphere (fewer practitioners, students, and academics who emphasize teaching were in attendance), the quality of the research remained high, and there were a number of papers presented that had strong implications for financial planners.
In this guest post, Dr. Derek Tharp – lead researcher at Kitces.com and an assistant professor of finance at the University of Southern Maine – provides a recap of the 2020 CFP Academic Research Colloquium, and highlights a few particular research studies with relevant takeaways for financial planning practitioners.
The 2020 CFP Academic Research Colloquium again had a strong showing from CFP Board Registered Ph.D. programs, with scholars from Missouri, Texas Tech, Georgia, and Kansas State producing nearly 37% of all research (when weighted by type of presentation and authorship rank). Additionally, Ohio State, Alabama, and Morningstar contributed another combined 15% of total research. Despite the concentration among top institutions, the ARC event remains academically diverse, drawing in scholars to present research from a total of 44 different institutions, including Princeton, Carnegie Mellon, and NYU.
This year’s colloquium featured a wide breadth of topics. Some particularly relevant topics for practitioners included:
- Re-examination of the conventional wisdom that small defined-contribution-plan investment menus are better than large menus (instead, research has suggested that bigger menus actually can be better for participants);
- An analysis of U.S. consumers’ willingness to pay for hourly financial planning services (which found that most consumers aren’t willing to pay anywhere near the rates that advisors charge);
- An investigation of whether fintech-mobile-application nudges can help individuals reduce their spending (yes, they can, but not by very much, and those nudges may drive consumers away from the apps in the future);
- A study examining whether the use of a financial advisor among high-investable-asset households is associated with a reduction in financial anxiety or an increase in investment confidence (no to reducing anxiety; yes to increasing confidence); and
- A study exploring whether different types of advisors (broker-dealers vs. RIAs, CFP professionals vs. non-CFP professionals, etc.) perceive the new “Best Interest” standard differently than a fiduciary standard (yes, they do; advisors at RIAs are more likely to be mistaken or confused about whether Reg BI applies to them, although brokers are more likely to mistakenly equivocate the “Best Interest” and fiduciary standard).
Overall, the fourth Academic Research Colloquium delivered on bringing together scholars to share high-quality financial planning research. However, this year’s low attendance felt like a step backward for the Center for Financial Planning’s goal to make the ARC the ‘academic home’ of financial planning. Nonetheless, the ARC continues to be a conference worthy of attending for both academics and practitioners who wish to engage in academic research.