The Academy of Financial Services (AFS) is excited to be collaborating with FPA to provide an "integrated conference experience" for AFS members this year. The AFS research conference will run for the full 2.5 days of the FPA Conference as part of a dedicated research track bringing the best of AFS and the Journal of Financial Planning (JFP) to you.
- A dedicated Research Room for presentations designed to bring the most relevant research impacting professional financial planners. This includes research sessions sponsored by the JFP and peer-reviewed research papers presented by AFS members. These sessions are CE credit approved.
- The winner of the JFP's Montgomery-Warschauer Award for best research from the prior year will present their research.
- In the Research Room AFS will coordinate other research content such as a panel discussion with the editors of the 4 major FP research journals explaining to planners and academics the type of research content to be found, how to best consume/digest research and apply it to a FP practice and more.
- A new FP Research Shark Tank. Based on the format of the popular TV series a select number of researchers will do 5 minute "pitches" on research that they believe would be significantly impactful for practitioners. Planners and researchers will then vote on the most exciting research proposal.
- AFS are co-ordinating 2 additional mini-breakout research rooms where researchers will present additional peer-reviewed, unpublished research selected from the many submissions we received. A timetable of these sessions can be found below.
- AFS will manage the research rooms for fully-hybrid attendance with face-to-face or virtual attendance. Although the content will be exceptional, we hope to see many of you in person as the networking, exhibit hall, FPA keynote speakers and other sessions outside of the research cannot be experienced any other way.
Solving the Puzzle within the Annuity Puzzle: Incorporating Irrevocability Aversion into Annuity Choice
Short Description
Researchers have found that annuities provide substantial benefits to retirement investors. Income annuities, which require the purchaser to irrevocably exchange an insurance premium for future income, are typically considered the most efficient vehicle to generate lifetime income. However, the actual sales of income annuities only accounted for a small portion of income-focused annuity sales. Most of the sales are attributable to deferred annuities with a guaranteed lifetime withdrawal benefit, which provide the purchaser ongoing access to the wealth in the product. This study builds upon a classic life cycle finance utility framework by introducing a discount factor penalty when the annuity is irrevocable. The magnitude of the penalty depends on the irrevocability aversion coefficient. We found that inclusion of this discount factor penalty can explain the distribution of actual annuity sales. Our framework can be used to inform annuity choice.
Upload a BLIND copy in Word Document format. Ensure all authors names are removed from the submission. Use the Paper Name + BLIND as the name of the file.
Lead & Corresponding Author
Tao Guo, Morningstar Investment Management
Email Address
Names of authors in order
Tao Guo, Spencer Look