FINSER_23_1 ACADEMY OF FINANCIAL SERVICES OFFICERS President Lance Palmer University of Georgia President-Elect William Chittenden Texas State University Executive Vice President-Program Thomas Coe Quinnipiac University Vice President-Communications Christine McClatchey University of Northern Colorado Vice President-Finance Diane Docking Northern Illinois University Thomas Langdon Roger Williams University Vice President-International Relations Claire Matthews Massey University Vice President-Professional Organizations Tom Warschauer San Diego State University Vice President-Mktg & Public Relations A. William Gustafson Texas Tech University Vice President-Membership Larry Prather Southeastern Oklahoma State University VP Local Arrangements 2014 Duncan Williams William Patterson University VP Local Arrangements 2015 Benjamin Cummings Saint Joseph’s University Immediate Past President Frank Laatsch Univ. of Southern Mississippi EDITOR, FINANCIAL SERVICES REVIEW Stuart Michelson Stetson University DIRECTORS Robert Moreschi Virginia Military Institute Dale Domian York University Charles Chaffin CFP Board of Standards Rich Fortin New Mexico State University Grady Perdue University of Houston Clear Lake Jacob Sybrowsky Utah Valley University PAST PRESIDENTS Frank Laatsch, 2012-13 Univ. of Southern Mississippi Brian Boscaljon, 2011-12 Penn State University-Erie Halil Kiymaz, 2010-11 Rollins College of Business David Lange, 2009-10 Auburn University, Montgomery Vickie Hampton, 2008-09 Texas Tech University Frank Laatsch 2007-08 University of Southern Mississippi Daniel Walz, 2006-07 Trinity University Anne Gleason, 2005-06 College of Charleston Stuart Michelson, 2004-05 Stetson University Grady Perdue, 2003-04 University of Houston-Clear Lake Vickie Bajtelsmit, 2002-03 Colorado State University Karen Eilers Lahey, 2001-02 University of Akron Tom Eyssell, 2000-01 University of Missouri-St. Louis Jill Lynn Vihtelic, 1999-00 Saint Mary’s College Terry Zivney, 1998-99 Ball State University Don Holdren, 1997-98 Marshall University Robert McLeod, 1996-97 University of Alabama Walt Woerheide, 1995-96 The American College Dixie Mills, 1994 -95 Illinois State University Ted Veit, 1993-94 Rollins College Mona Gardner, 1992-93 Illinois Wesleyan University Jean L. Heck, 1991-92 Villanova University Frank K. Reilly, 1990-91 University of Notre Dame Lawrence J. Gitman, 1989-90 San Diego State University Travis S. Pritchett, 1988-89 University of South Carolina Tom Potts, 1987-88 Baylor University Robert F. Bohn, 1986-87 Golden Gate University Tom Warschauer, 1985-86 San Diego State University published in collaboration with the Financial Planning Association Financial Services Review is the journal of the Academy of Financial Services. Membership dues of $75 to the Academy include a one-year subscription to the journal. Financial Planning Association members receive digital access to the current volume/issue of the journal. Membership forms can be downloaded from the journal website at http://www.academyfinancial.org. Or for membership, subscription, and address change notification, please contact Stuart Michelson, School of Business, Stetson University, 421 N. Woodland Blvd., Unit 8398, DeLand, FL 32723. Email: smichels@stetson.edu. Editorial: Authors should submit their papers electronically (Word format, please) as an e-mail attachment to the Editor at smichels@stetson.edu. AFS Member submission fees are $50. The AFS non-member submission fee is $125, which includes a one year membership to AFS. Concurrent with the submission, please pay online or mail a check (for US funds) payable to AFS to Stuart Michelson at the address above. Should a manuscript revision be invited, no additional fees will be required. Style information for manuscripts is on the inside back cover of this journal. Copyright © 2014 Academy of Financial Services. All rights of reproduction in any form reserved. Financial Services Review The Journal of Individual Financial Management Vol. 23, No. 1, 2014 EDITOR Stuart Michelson, Stetson University ASSOCIATE EDITORS Benefits and Retirement Planning Vickie Bajtelsmit Colorado State University Stephen M. Horan CFA Institute Walter Woerheide The American College Estate Planning Ning Tang San Diego State University Investments Robert Brooks University of Alabama Dale Domian York University Jim Gilkeson University of Central Florida Jason Greene Georgia State University William Jennings United States Air Force Academy Larry Prather Southeastern Oklahoma State University Insurance Larry Cox University of Mississippi David Lange Auburn University Financial Institutions Stanley D. Smith University of Central Florida Investor Psychology and Counseling John Nofsinger Washington State University Meir Statman Santa Clara University Real Estate James Larsen Wright State University Karen Eilers Lahey The University of Akron International Bill Blair MacQuarie University S. J. Chang Illinois State University Lawrence Rose Massey University Sharon Taylor University of Western Sydney Education Jean Louis Heck Saint Joseph’s University Financial Planning Profession Tom Warschauer San Diego State University Co-Published by the Academy of Financial Services and the Financial Planning Association The editor of Financial Services Review wishes to thank the Stetson University, School of Business, for its continuing financial and intellectual support of the journal. Aims and Scope: Financial Services Review is the official publication of the Academy of Financial Services. The purpose of this refereed academic journal is to encourage rigorous empirical research that examines individual behavior in terms of financial planning and services. In contrast to the many corporate or institutional journals that are available in finance, the focus of this journal is on individual financial issues. The Journal provides a forum for those who are interested in the individual perspective on issues in the areas of Financial Services, Employee Benefits, Estate and Tax Planning, Financial Counseling, Financial Planning, Insurance, Investments, Mutual Funds, Pension and Retirement Planning, and Real Estate. Publication information. Financial Services Review is co-published quarterly by the Academy of Financial Services, and the Financial Planning Association. Institutional subscription price for the year 2014 is $100. Personal subscription price for the year 2014 is $75 and is available by joining the Academy of Financial Services. Further information on this journal and the Academy of Financial Services is available from the website, http://www.academyfinancial.org. Postmaster and subscribers should send change of address notices to Stuart Michelson, Academy of Financial Services, Stetson University, School of Business, 421 N. Woodland Blvd., Unit 8398, DeLand, FL 32723. Editorial Office: Stuart Michelson, School of Business, Stetson University, 421 N. Woodland Blvd., Unit 8398, DeLand, FL 32723. Phone: (386) 822-7376. Email address: smichels@stetson.edu. Web address: www.academyfinan- cial.org. Advertising information. Those interested in advertising in the journal should contact Stuart Michelson, School of Business, Stetson University, 421 N. Woodland Blvd., Unit 8398, DeLand, FL 32723. Email address: smichels@stetson.edu, (386) 822-7376. Printed in the USA © 2014 Academy of Financial Services. All rights reserved. This journal and the individual contributions contained in it are protected under copyright by the Academy of Financial Services, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. In addition, the Academy of Financial Services hereby permits educators and educational institutions the right to make photocopies for non-profit educational classroom use. Permission of the Academy is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Permissions may be sought directly from the Editor, Stuart Michelson. Contact information: Stuart Michelson, School of Business, Stetson University, 421 N. Woodland Blvd., Unit 8398, DeLand, FL 32723. Phone: (386) 822-7376. Email: smichels@stetson.edu. Derivative Works Subscribers may reproduce tables of contents or prepare lists of articles including abstracts for internal circulation within their institutions. Permission of the Academy is required for resale or distribution outside the institution. Permission of the Academy is required for all other derivative works, including compilations and translations. Electronic Storage or Usage Permission of the Academy is required to store or use electronically any material contained in this journal, including any article or part of an article. Except as outlined above, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the Academy. Address permissions requests to the Editor at the address noted above. Notice No responsibility is assumed by the Academy for any injury and/or damage to persons or property as a matter of products liability, negligence, or otherwise, or from any use or operation of any methods, products, instructions, or ideas contained in the material herein. The Editors, the Academy, and our sponsors assume no responsibility for the views expressed by our authors. From the Editor This issue contains Issue 1 of Volume 23 of Financial Services Review (FSR). I would like to thank the board and members of the Academy of Financial Services for their continued support. I continue to work in broadening the scope of articles, while still focusing on individual financial management and personal financial planning. I encourage authors to reach out when discussing implications of their findings in a more comprehensive way. As such, all articles in the Journal more appropriately relate to financial planning issues. The lead article “Does a Relationship with a Financial Service Professional Overcome a Client’s Sense of Not Being in Control of Achieving their Goals?” is by Danielle D. Winchester at North Carolina A&T State University. In this article the author examines the effects of individual control beliefs on financial goal progress under the Theory of Planned Behavior. Her findings suggest that low control beliefs are significantly associated with less financial-goal progress; although she shows that the receipt of expert financial advice can reduce this negative effect and results in similar, and in some goal areas, in higher levels of goal progress than that of individuals with high control beliefs. The second article “Low-Income Employees: The Relationship Between Information from Formal Advisors and Financial Behaviors ,” is coauthored by Crystal R. Hudson at Clark Atlanta University and Lance Palmer at the University of Georgia.In this article, the authors investigate the financial literacy of low-income employees, by examining their financial behaviors. Using data from the 2010 Survey of Consumer Finances, the authors find a significant and positive relationship between the use of information from formal advisors and low-income employees’ positive financial behaviors. Their research demonstrates that low-income employees who use information from formal advisors exhibit better financial behaviors than those who do not use advisors.. The third article, “Downside Risk – What the Consumer Sentiment Index Reveals ,” is coauthored by Mark A. Johnson at Loyola University Maryland and Atsuyuki Naka at University of New Orleans. The authors examine the ability of consumer sentiment using different age groups to forecast short-term and long-term equity returns. Using a long-horizon asymmetric response regression format, they show that negative changes in sentiment have a greater influence on stock returns than positive changes in sentiment. They observe that younger individuals appear to be less risk-averse than older individuals. This article provides evidence that risk is an important consideration when investing, and that demographic characteristics are a consideration when determining appropriate investing approaches. The fourth article, “Investor Preference for Skewness and the Incubation of Mutual Funds” is coauthored by Philip Gibson at the University of the Incarnate Word and Michael Finke at Texas Tech University. The authors investigate the performance of funds created through incubation. Incubation creates an incentive for fund families to select highly skewed securities since extreme performance during incubation will increase the likelihood that some funds will outperform Financial Services Review 23 (2014) v–vi 1057-0810/14/$ – see front matter © 2014 Academy of Financial Services. All rights reserved. before they are sold to the public. Although incubation is as an innovative fund promotion technique, it may harm investors by creating the perception that random prior returns are a signal of fund quality. The authors find that net new money flow increases with an incubated fund’s skewness. After incubated funds are sold to the public, skewed funds attract more investor dollars and their average performance declines. Their results suggest that the use of skewed securities during incubation is an effective method for increasing demand, but may be a poor quality signal of future performance. The final article, “Performance and Persistence of Performance of Healthcare Mutual Funds,” is coauthored by Abhay Kaushik and Lynn K. Saubert both at Radford University. In this article the authors analyze 10.55 actively managed domestic healthcare mutual funds over a 12-year period. They show that healthcare mutual funds outperform the passive index by roughly 2.97 percent per year after controlling for the market risk premium, growth and size premiums, and momentum effects. Additionally they demonstrate that the abnormal performance over and under does not persist over subsequent periods, indicating that under and over performances are mean reverting. I would like to send a special thank you to the many reviewers that have significantly contributed to the quality of our journal by providing timely and thorough reviews of the submissions to our journal. Thanks to those who make the journal possible, especially the referees and contributing authors. Please consider submission to the Financial Services Review and rely on the style information provided to ease readability and streamline the review process. The Journal welcomes articles over the range of areas that comprise personal financial planning. While FSR articles are certainly diverse in terms of topic, data, and method, they are focused in terms of motivation. FSR exists to produce research that addresses issues that matter to individuals. I remain committed to the goal of making Financial Services Review the best academic journal in individual financial management and personal financial planning. I’m pleased to announce the recent partnership between Academy of Financial Services and The Financial Planning Association. The joint April announcement stated “The Financial Plan- ning Association® (FPA®) and the Academy of Financial Services (AFS) have entered into a partnership that makes the two organizations co-publishers of Financial Services Review. “As the membership organization for CFP® professionals, FPA is committed to bringing together all key stakeholders that advance the profession of financial planning. This partnership enables FPA to connect academicians, practitioners and students in support of its members and the growth of the profession,” said Lauren M. Schadle, CAE, FPA executive director and CEO. “An electronic version of Financial Services Review will be available to all FPA members, which will com- plement the award winning Journal of Financial Planning and substantiate FPA’s role in expanding the body of knowledge for financial planning.” “FPA and AFS share the desire to encourage basic and applied research in personal financial planning, as well as the need for interaction between financial services professionals and academicians. Working together, we can bring these groups into greater alignment for the benefit of the profession and the people it serves,” added Lance Palmer, Ph.D., CFP®, president of AFS and associate professor at the University of Georgia. AFS will be invited to co-sponsor academic research presentations and hold a joint session to discuss the needs and priorities for practitioner-focused academic research at FPA BE: Seattle 2014, the annual conference of the financial planning community Sept. 20-22.” Best regards, Stuart Michelson Editor Financial Services Review vi Editorial / Financial Services Review 23 (2014) v–vi