Development of personal finance as an academic discipline

  • Keith Redhead

    Student thesis: Doctoral ThesisDoctor of Philosophy


    Personal finance is developing as an academic discipline, but has some way to go before it is generally accepted as such. The thesis reviews five contributions, from other authors, to the development of personal finance as an academic discipline (dating between 2002 and 2008). Those contributions emphasise the need for a generally agreed body of theory for an academic discipline of personal finance. My publications, in particular Personal Finance and Investments: A Behavioural Finance Perspective, have sought to establish a body of theory and knowledge for an academic discipline of personal finance. That body of theory and knowledge is multidisciplinary, and much broader than the bodies of theory suggested by the five previous contributions. It is also much broader, and based more on academic research, than the curricula of professional bodies such as the Chartered Insurance Institute (which reflects the curriculum set out by the Financial Services Authority) for the training of financial advisers. The greater breadth is illustrated by means of comparisons of threshold concepts covered by my publications with those covered by the previous five contributions, and by professional training programmes. Consideration of the objectives and processes of personal financial advice suggests that an academic curriculum should be more multidisciplinary than the existing curricula of professional bodies. In particular the curriculum should include behavioural and relationship dimensions. It is suggested that attention to the psychology of clients should be included in the education and training of financial advisers. This could take the form of using behavioural finance to gain insights into how clients might perceive financial products and services. Some of my publications being considered here (those published in the Journal of Financial Planning and the Journal of Financial Service Professionals) provide behavioural finance perspectives on client perceptions of financial products and financial advice (and their providers). Incorporation of behavioural dimensions 6 into the education and training of financial advisers would help to develop a subjectivist1 dimension to their analyses of client financial problems. Existing professional training programmes focus on objectivist2 factors such as portfolio management and regulatory issues. There is a need to incorporate a subjectivist, client focused, dimension.

    Behavioural perspectives on financial products, financial advice, and the providers of financial services are not my only contribution through the medium of refereed academic journals. Another aspect of the proposed curriculum has been addressed through that medium, namely time diversification. Time diversification, that leads to the relative risk of stocks declining as the investment horizon extends, was shown to be dependent on the rate of investment growth and the level of stock return volatility. The approach entailed computer simulation based on the Black-Scholes option pricing model. Implications for personal financial advice, and for behavioural perspectives, were drawn.
    Date of Award2011
    Original languageEnglish
    Awarding Institution
    • Coventry University
    SupervisorTom Donnelly (Supervisor)

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