investor’s profile, behaviors, and financial...

Investor’s profile, behaviors, and financial well-being

BEHAVIOURAL SCIENCES AND INVESTOR EDUCATION CONFERENCE

Securities and Exchange Commission of Brazil

7-8 December 2017

Valeska Marinho

www.valeskamarinho.med.br

Financial well-being and Health

Relationship between mental wellbeing and financial

management

Relationship between financial satisfaction and happiness

Relationship between health and financial satisfaction

Financial dimensions of quality of life

Financial well-being – definitions and measurements

Stress and finances

https://www.google.com.br/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjer4Kk8cPXAhULFpAKHZX8CkoQjRwIBw&url=https%3A%2F%2Fwww.healthpopuli.com%2F2017%2F02%2F28%2Fstress-social-determinant-health-money-politics-top-list-2017%2Fapa-stress-in-america-2017-stressors-in-past-10-yrs-money-terror-shootings%2F&psig=AOvVaw0sKvaf2YGQ3KSj9QLT49yT&ust=1510948790058449

Stress and finances

Mental wellbeing and financial management

Collard, Sharon and Hayes, David (2014). Financial Wellbeing In Later Life: Evidence And Policy.

ILC-UK, London. Available at: http://www.ilcuk.org.uk

http://www.ilcuk.org.uk/

Self-reported financial situation is a strong indicator of mental wellbeing

≥50 who are ‘Finding it very difficult’ to manage financially have almost eight times the odds of poor mental wellbeing compared with those who say they are ‘Living comfortably’

Financial well-being was positively related to a broader sense of perceived good general health

Mental wellbeing and financial management



Arber S, Fenn K, Meadows R. Subjective financial well-being, income and health inequalities in mid and later life

in Britain. Soc Sci Med. 2014 Jan;100:12-20.


≥50 years – self-reported financial satisfaction and happiness are closely intertwined (also in the Globe!)



Financial satisfaction and happiness


Individual-level characteristics explain most of the difference

Being divorced or separated;

Being unemployed;

Having low levels of education;

Self-categorizing as lower class;

Having no savings.



Financial satisfaction and happiness


Perceived expectation of future financial difficulty was associated with a decline in reported QoL for both genders

Higher levels of financial wealth also demonstrated a significant positive association with QoL

Higher subjective socio-economic status was associated with greater quality of life

Women on average record 1.2 points higher wellbeing

Living alone was significant for women, but in a positive direction

Age, depression, illness that limits activity, limitation in activities of daily living (ADLs) worst QoL

Financial dimensions and QoL




Health Quality of Life Financially secure Keeping active: - mental, cognitive, social Happiness

Tate R et al., The Gerontologist (2003) 43 (5):735-744.

Successful Aging

Financially healthy, happy, and free from worry with regards to

financial problems (CFPB, 2015).

According to the consumer’s perspective:

A feeling of being able to fully meet current and ongoing

financial obligations, feel secure about the financial future,

and being able to make choices to enjoy life (CFPB, 2015;

Zyphur, Li, Zhang, Arvey, & Barsky, 2015).

Financial well-being Definition

Financial well-being

Related to several variables:

Personality characteristics,

Life experiences,

Behavior,

Concern,

Personal judgment regarding the common personal

finance topics of money, credit, and economic resources

(Prawitz et al., 2006).


Why measures of financial well-being is a need?

Financial education is key to promoting positive financial behaviors

and to achieving better financial satisfaction and well-being,

Understanding, measuring and promoting Financial well-being is is an

important step in promoting health and QoL,

Achieving financial well-being is one of the many objectives in

promoting financial education, adequate measures of such construct

in local language is an important step.


Marinho V; Howat-Rodrigues, A. B. C; Laks J in press

Free and reliable tool

Measures financial well-being across different individuals and

the same individual over time (CFPB, 2017).

Objective measures of financial well-being are not yet

available in Brazilian Portuguese.

Consumer Financial Protection Bureau CFPB's Financial well-being scale

CFPB's Financial well-being scale

Objective measures of financial well-being are not yet

available in Brazilian Portuguese.

CFPB's Financial well-being scale

Study design

Initial step – translation and adaptation

Second step - qualitative statistical analysis and theoretical

adequacy of data analyzed.

Ethical Consideration

The Ethics Committee on Human Research from Institute of

Psychiatry Federal University of Rio de Janeiro approved this

research and all participants signed an informed consent form

CFPB Financial well-Being Scale translation and adaptation process


CFPB Financial well-Being Scale translation and adaptation

process

CFPB well-being instrument is a 10 item 5-Likert scale,

extensively tested and validated, ensuring validity and

reliability. The scale is driven by the consumer’s perspective of

FWB and allows a single score, capturing the core elements of

FWB.



Three English language proficient researchers

100% of concordance - seven items,

Discordance met 33,3% and when concordance were met between two researchers this version was chosen.

Likert label 100% concordance.

Items presented to a convenience sample comprised of 10 individuals attending a conference organized by Brazilian Securities and Exchange Commission, both sex, mean age 43.3 years (21-63 years-old).

Translation and item adaptation of a CFPB well-being scale


Participants

834 people (264 women and 570 men) who responded to an

invitation sent by the Brazilian Securities and Exchange

Commission mailing list or from a website online invitation.

Mean age 39.27 years (dp=10.82)

High schooling years (60.9% post-graduate),

Married or living together (60%)

High purchasing power (41.36 dp=13.27).



Instruments

Socio-demographic data: Gender, age, schooling years

Purchasing power index - Brazilian Association of Market

Research Companies (ABEP, 2016)

QoL was assessed by a 5 Likert scale for the question “How

would your score your current quality of life?”



Evidence of the validity of the internal structure was assessed

based on exploratory factor analysis and confirmatory factor

analysis.

We also verified the validity of measures analyzing contrasting

groups. For the analysis of contrasting groups, we used

differentiation based on quartis of original score of Well-

Being, and we verified if these groups were different on QoL

and purchasing power.



Results

Brazilian sample indicate a unidimensional measure with

satisfactory validity and reliability.

Exploratory and confirmatory factor analysis demonstrated

high level of reliability of the items and goodness of fit.

10 items distributed in one factor, called financial well-being.

The measure showed structural stability in the two different

cultural contexts (Brazil and USA)



Results

Analysis by contrasting groups.

Instrument’s ability to discriminate between groups:

The group with higher financial well-being presented

higher averages in purchasing power and QoL;

The group with lower financial well-being, presented lower

averages in purchasing power and QoL.



To our knowledge this is the first adapted and validated

measure of financial well-being in our language.

The increase in economically active population in developing

countries such as Brazil, the possibility of changes in local

labor laws, and the growing enhance in purchasing power in

lower-middle income classes, points to the need to enhance a

culture of investing and to provide financial education in our

country.

Final remarks

investor’s profile, behaviors, and financial...

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