Written By: CFP® Rutgers Cooperative Extension, Barbara O’Neill, AFC®, Ph.D.
At the 2015 AFCPE Symposium, a strong case was made for incorporating research into professional practice. Benefits of research were reviewed along with consequences when research is lacking (i.e., anecdotes instead of evidence) and how to become a better consumer of research. To address the latter, The Standard will now include research briefs to make it easy for members to “consume” research. Briefs include a synopsis of the methodology and findings of research studies and implications for professional practice. Each set of research briefs will focus on a specific personal finance topic.
So, I volunteered to write some initial research briefs about one of my favorite research topics: the association between health and personal finances. Below is a summary of two recent studies.
“Health Information Search and Retirement Planning” by N.A. Carr, R.A Sages, F.R. Fernatt, G.G. Nabeshima, and J.E. Grable (Journal of Financial Counseling and Planning, 2015: http://afcpe.org/assets/pdf/ volume_26_1/pages_3-16.pdf).
This study found that individuals who engage in health information search behaviors, such as reading the contents and nutrition details of food labels, are more likely to engage in financial planning activities such as calculating retirement needs and using a personal computer to plan for retirement. Data from a large national sample with 4,825 cases were analyzed and financial planning was proxied through questions about retirement readiness. Results from this study indicated that activities such as physical activity and eating well were not associated with financial planning. However, cognitive processes were statistically significantly associated with planning for retirement. The researchers concluded that “the health-wealth connection may be more cognitive than physical.” An implication for practitioners is that a person’s “information search profile” can provide valuable clues about financial behavior. In addition, cognitive interventions, such as personalized financial assessments and action steps that are simple to communicate and implement, may foster positive financial planning behavior.
“Healthy, Wealthy, and Wise: Retirement Planning Predicts Employee Health Improvements” by T. Gubler and L. Pierce (Psychological Science, September 2014: http:// pss.sagepub.com/ content/25/9/1822. abstract).
This study found that employees’ decision to contribute to a 401(k) retirement savings plan was associated with action to correct poor physical health indicators that were revealed during an employersponsored health exam. Researchers followed workers for two years to see if they attempted to improve their health and whether changes were tied to financial planning. 401(k) plan contributors showed improvements in health behaviors about 27 percent more often than non-contributors, despite having few health differences prior to the program. The relationship between retirement savings and health practices was correlational. Findings were attributed to the personality traits of conscientiousness and time discounting preference (i.e., valuation placed on receiving something today versus at a later date). An implication for practitioners is to pay attention to cues about clients’ conscientiousness (or lack ther eof), with respect to positive health practices, as an indicator of potential financial behavior compliance. In addition, consider taking steps to foster client conscientiousness such as assigning tasks with deadlines, breaking large tasks down into small ones, and educating clients about organizational tools such as websites and phone apps.
Want to “consume” more research in a “user-friendly” format? This Rutgers Cooperative Extension Small Steps to Health and Wealth™ article describes additional studies that link health and personal finances: https://njaes. rutgers.edu/sshw/message/message. asp?p=Finance&m=258.
Research provides scientific evidence that can improve professional practice, provide support for programs, and even save lives. As AFCPE builds the bridge from research to practice, I hope that you will cross it.
Barbara O’Neill, Ph.D., AFC®, CFP®, is Extension Specialist in Financial Resource Management for Rutgers Cooperative Extension and provides personal financial information to residents of New Jersey and beyond. She can be reached at oneill@aesop. rutgers.edu and on Twitter at @moneytalk1.