The impact of time perspective on the decision making of financial advisors
This study examines the time perspective (TP) and intertemporal choice biases that exist among professional financial advisors, and the extent to which those biases impact their decision making. Certified Financial Planners (CFP®) from various types of firms (accounting, insurance, securities, and general financial planning) responded to two established time perspective instruments, the Zimbardo Time Perspective Inventory (ZTPI) and the Consideration of Future Consequences Scale (CFC). These responses were factor analyzed and used to measure the dimensions of TP that exist among financial planners. The planners also responded to demographic measures and a number of financial planning cases that included some intertemporal choice scenarios. The cases were used to examine the impact of TP on decision making and also to investigate the delay effect, the magnitude effect, and preference reversal. A factor analysis of the TP items yielded multiple future and present factors beyond what has been found in prior research. This suggests that different dimensions exist among financial planners and thus, the standard TP scales used in prior research (i.e., the CFC and ZTPI) may not be adequate for measuring TP among different types of decision makers. Importantly, financial planners generally tended to be future oriented. While some minor differences existed between groups, there were no differences between the advisors based on firm type for most TP measures.
The results also suggest that the characteristics of the task were more important than individual TP biases in determining planners' decisions. That is, even though financial planners were more future oriented, they made client recommendations that were future oriented in some cases and present oriented in other cases. This is consistent with the literature indicating the importance of task characteristics on decision making and suggests that task characteristics are more important than individual characteristics in determining the behavior of financial planners. A link was also found between various TP scales and average discount rates that measure impulsiveness in intertemporal choice scenarios. However, contrary to expectations, the planners did not uniformly display the intertemporal choice biases found in prior research. The implications of these results and directions for future research are discussed.
Long term planning;
0451: Social psychology