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Economics-Based v. Conventional Financial Planning

ECONOMICS-BASED V. CONVENTIONAL FINANCIAL PLANNING

Cost Free
Presentation Length 1.0 hour

Recorded DateFebruary 8, 2021
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaFinance
Course LevelBasic
Course Description

Economics-based and conventional financial planning bear no connection. Economics-based planning is grounded in the life-cycle theory and forms the basis for 11 Nobel Prizes awarded in finance economics. The central premise is that households seek a smooth living standard over time and across times -- good times and bad. The theory explains saving, spending, insurance, and portfolio diversification decisions. Conventional planning bears no connection to economic theory. Instead, it constitutes a collection of ad hoc rules of thumb, which guide households to make wildly inappropriate financial decisions. 

Learning Objectives:


  • Recall the history of financial economics

  • Define the life-cycle model and recognize its prediction of consumption smoothing

  • Determine how to differentiate conventional financial planning and economics-based financial planning 

  • Identify how conventional financial advice is at odds with economic theory, common sense, and everyday behavior

  • List examples of economics-based planning and the extent to which conventional planning recommendations differ

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Linkedin

Laurence Kotlikoff

MaxiFi
Professor, Boston University
kotlikoff@gmail.com
(617) 353-4002

Maxifi

Laurence Kotlikoff is a Professor of Economics at Boston University, Fellow of the American Academy of Arts and Sciences, Fellow of the Econometric Society, Research Associate of the National Bureau of Economic Research, President of Economic Security Planning, Inc., and Director of the Fiscal Analysis Center.

Professor Kotlikoff has written 19 books and hundreds of professional articles and Op-Eds. He is a New York Times best-selling author and a frequent television and radio guest. His columns have appeared in The New York Times, The Wall Street Journal, The Financial Times, The Boston Globe, Bloomberg, Forbes, Yahoo.com, Fortune, and other major publications. In 2014, The Economist named him one of the world’s 25 most influential economists.

About Our Presenter

Maxifi
MaxiFi is our state-of-the-art financial and retirement planning tool that calculates what you should spend, save, and insure annually to maintain your living standard. It also examines tens of thousands of Social Security, retirement account, annuity and other strategies to raise your living standard. The result is often tens to hundreds of thousands of dollars in additional lifetime spending.