2013 Conference

Financial Services

Financial Services

This paper examines the effect of Certified Financial Planner® (CFP®) certification on the neural activation of participants in an advisor-intermediated stock market game using functional magnetic resonance imaging (fMRI).  Brain activations were greater in regions associated with continued decision-making and error detection when employing an underperforming non-CFP advisor as compared with an underperforming CFP advisor.  This greater activation may reflect greater uncertainty or “second guessing” associated with the use of a non-CFP advisor during periods of underperformance.  In contrast, when advisors outperformed the overall market, there were no significant differences in brain activations when using CFP or non-CFP advisors.  In this experiment, the CFP mark generated observable behavioral and neurological differences in participant decisions to retain an investment advisor during underperformance.  To the extent that maintaining a consistent investment strategy during inevitable market fluctuations is a desirable goal, the behavioral and neurological impact of a designation of expertise such as the CFP may benefit consumers by engendering relatively greater confidence during temporary periods of underperformance.