Skip to main content

The Academy of Financial Services 35th Annual Meeting

September 21–22, 2021


Evaluating Non-financial Preferences Using a Modified MaxDiff

Wednesday, September 22, 2021 at 2:15 PM–3:15 PM Eastern Time (US & Canada) add to calendar
ESG, Revealed Preferences, Non-financial, MaxDiff
Short Description

Financial planners evaluate a client’s risk tolerance and other factors to determine suitable risk/return trade-offs in the generation of pecuniary portfolio advice. Current sustainability trends globally have escalated the focus on evaluating non-pecuniary objectives of the client beyond traditional faith-based issues to more mainstream Environment, Social and Governance concerns. This research utilized a three-step assessment of consumers to determine their interest in integrating non-financial issues of concern with the construction of their portfolio. It determined the magnitude of their interest based on a willingness to pay, and finally applied a modified MaxDiff Analysis to present a series of three option choices between 6 self-selected issues of significance and 3 return trade-offs scaled to the commitment level of the consumer. The modification in the MaxDiff was a continuous scale, sum to 100, for the three choices which allowed additional granularity at the cost of increase noise in responses.

Lead & Corresponding Author

Shawn Brayman, Morningstar
Job Title
Director of Financial Planning Methodology
Email Address

Additional Authors