Tomi Dahlberg, Anne Sunikka and Anssi Öörni

Hidden wealth – how consumers perceive wealth

and its management?

Anne Sunikka

Helsinki School of Economics Presentation at IAREP 2008 at LUISS Rome

Tomi Dahlberg, Anne Sunikka and Anssi ÖörniHelsinki School of Economics,

Department of Business Technology4 of September, 2008

Anne Sunikka IAREP 4 Sept. 20082

Research-in progress project

• A new concept for total wealth management?– Consumers would get a new service for wealth

management, diversification and allocation – Financial companies would get a systematic new tool

that would facilitate customer encounters• Main research partners

– National Consumer Research Centre– Helsinki School of Economics

• Financiers– Finnish funding agency for technology and

innovation– A Finnish financial conglomerate– A Finnish financial newspaper

• Others– Federation of Finnish Financial Services– Insurance Supervisory Authority– Tampere University– New York University


Overview of the presentation

• Research questions• Multiple methods• Some theories…• Preliminary results• Conclusion


Interview / Focus Group Themes and Research Questions

• Interview / Focus Group Themes– consumers’ perception of wealth– reasons for accumulating wealth and – perceived risks related to wealth management

• Research Questions– How do consumers perceive wealth in general

and different asset classes, in particular? – How well do empirically discovered motives

relate to those proposed by financial and social psychological theories?


Background information


Theories (1)

• Financial theory – Efficient market hypothesis (Roberts, 1967; Fama,

1965 & 1970) – Capital asset pricing model (CAPM) that builds on the

idea of an efficient frontier (Markowitz, 1952; Sharpe, 1965)

– Assumptions about rational, value maximizing consumers (homo economicus) and the availability of perfect market information.

• Behavioral finance– Bounded rationality (Simon, 1955) – Judgment diverges from rationality: overconfidence,

optimism, anchoring, extrapolation, and heuristics (see e.g. Kahneman et al., 1982).

– Choice diverges from rationality: prospect theory (Kahneman and Tversky, 1979).


Theories (2)

• Consumer behavior and social psychological theories

• Mowen (1988): three perspectives for consumer purchase decision-making:

1. Decision-making perspective – buying behavior results form consumers’ engaging in a problem-solving tasks (Simon, 1957; Howard and Sheth, 1969; Engel et al., 1968)

2. Experiential perspective – consumers make purchases to create feelings, experiences and emotions (Pillar and Mueller, 2004; Thompson, 1989)

3. Behavioral influence perspective – consumers act in response to environmental pressures (Foxall, 1991 & 1993).

• TRA (Fishbein and Ajzen, 1975) and TPB (Ajzen, 1991) propose the most important determinant of a person's behavior is behavioral intent. The individual's intention to perform a behavior is a combination of attitude toward performing the behavior and subjective norm (and perceived behavioral control in the case of TPB).


Conclusions

• Consumers do not perceive wealth as a unified concept or portfolio. Rather, various wealth categories are perceived differently.

• The motives to manage wealth given by consumers deviate from those proposed by financial theories.

• The link between risk and return is poorly represented among consumers’ wealth management motives.

Tomi Dahlberg, Anne Sunikka and Anssi Öörni

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