Michael S. Finke
Professor, Texas Tech University
Michael S. Finke thinks of himself as a bridge between academia and the financial advisory business. A professor at Texas Tech University, Mr. Finke, 43, has written papers on investor risk tolerance, withdrawal rates and financial advice. But the paper heard ’round the advisory world this year was “The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice,” a study he co-wrote.
In it, Mr. Finke analyzed a sample of brokers in states with either a strict fiduciary standard or none. His study found no statistical differences between the two groups when it came to serving clients and providing a range of products — contradicting the argument that a fiduciary duty will hurt brokers’ ability to do business. Though the paper very well could resurface next year should regulators revive initiatives to address “fiduciary,” the professor expects to turn his research focus toward retirement planning.
He is working with Wade D. Pfau, associate professor at Japan’s National Graduate Institute for Policy Studies, and David Blanchett, head of retirement research at Morningstar Investment Management, on a study of the implications of low yields on traditional retirement strategies.
“If you assume that current yields will continue, we go from a less than 5% historic failure rate to a 33% failure rate,” Mr. Finke said. “Our conclusion is that it’s very scary. The only plausible alternative is to work longer or plan on a more modest retirement.”—Darla Mercado