Hidden wealth – how consumers perceive wealth and its management?

Hidden wealth – how consumers perceive wealth and its management? Tomi Dahlberg, Anne Sunikka, Anssi Öörni, Helsinki School of Economics, Department of Business Technology Abstract According to mainstream financial theory, rational consumers optimize the risk-reward ratio of their wealth by allocating wealth to various assets. Many social-psychological theories explain consumer behavior as substantially cognitive processes. Within the context of consumer wealth management, our article answers two research questions. First, how do consumers perceive wealth in general and different asset classes, in particular? We also investigate how various sources of values and experience influence consumers’ wealth management related decisions. As we explore empirically various wealth perceptions and motives, we address the second research question; how well do empirically discovered motives relate to those proposed by financial and social psychological theories? We collected empirical data in Finland with eleven financial expert interviews, six consumer focus group discussions and a survey questionnaire responded cumulatively by 702 consumers and 43 financial experts. Motivated by the empirical findings, we introduce the concept of hidden wealth to describe consumers’ wealth management behavior. According to our findings, consumers have predominantly other motives than those proposed by financial theory, and their behavior is significantly influenced by several factors. Security appears as the dominant goal and motive of wealth management. Even in the case of financial assets related decision making, the importance of social values, past experience, feelings and intuition appears to override the importance of risk – return thinking as the source of behavioral motives. We also found differences in how various wealth categories are perceived. A distinctive feature of our study is that we collected empirical data from two independent sources. The underlying tone of the wealth perceptions is shared by consumers and financial experts. Finally, we discuss the significance of our findings by relating our findings to relevant theories as well as the implications of our research both for research and practice. 1. Introduction How humans make decisions and how decisions impact behavior, are among the questions that have always intrigued scientists. Within this broad context, our paper focuses on consumers’ financial decisionmaking behavior, and more specifically, on how consumers perceive wealth and wealth management. One of the main themes in decision-making research is how rational the human decision-making behavior is. Rational decision-making behavior is typically described as the maximization of an individual’s value by first collecting information, by then evaluating alternatives on the basis of value maximizing criteria, and by finally selecting the alternative deemed to provide most value. As rational decision-making requires more efforts than non-rational decision-making, the supporters of rational decision-making theories typically propose that the more important a decision is to an individual the more likely is rational decision-making. Since success in personal wealth management significantly impacts an individual, it would be logical to assume that concepts which characterize rational decision-making should also describe consumers’ wealth and wealth management perceptions and behavior – as assumed by mainstream financial theories (Fama, 1965; Fama, 1970; Markowitz, 1970; Sharpe, 1964). The financial / monetary nature of wealth also appears to support the assumption outlined above. The wealth of consumers consists of real and financial assets, both of which are bought, sold, even taxed, based on their financial / monetary value. With the help of money, real assets can be converted into financial assets and vice versa. Furthermore, differences in the financial/monetary return of these assets reflect the various risk levels of respective assets. Thus, it appears only natural to value wealth in

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financial/monetary terms with the behavioral aim to maximize the financial / monetary return of wealth at a certain risk level, or to minimize the risk at a certain financial / monetary return level. Another main theme in decision-making research is how conscious or cognitive human decisionmaking behavior is. Many widely applied social-psychological theories, most notably the theory of reasoned action (TRA) (Fishbein and Ajzen 1975) and the theory of planned behavior (TPB) (Ajzen, 1991; Ajzen, 2002) explain (consumer decision-making) behavior as substantially cognitive processes. These theories propose that humans make conscious behavioral choices based on their perceived personal values, beliefs, perceived control, and attitudes, which will lead to behavioral intentions and finally to behavior. Let’s put these generic theories into the context of consumers’ wealth management behavior. Although TRA and TPB do not propose that consumers apply such rational decision-making criteria to reach decisions these theories propose that wealth related decisions and resulting behaviors are cognitive. Against this background, we raise two research questions. Firstly, how do consumers perceive wealth in general and different asset classes, in particular? To answer this research question we collected empirical data in an ongoing research project in Finland with financial expert interviews, consumer focus group discussions, a financial expert survey questionnaire with 43 responses and a consumer survey questionnaire with 702 responses. A distinctive feature of our study is that we collected empirical data from two independent sources in order to understand how consumers perceive and are considered to perceive wealth. This leads to the second research question; how well do empirically discovered wealth management perceptions relate to those proposed by financial and social psychological theories? Our paper will show that consumers consider wealth from multiple perspectives and that correspondingly their wealth management behavior appears to be significantly influenced by several factors. We also found differences in how various wealth categories are perceived. Furthermore, we will show that consumers perceive wealth predominantly from other perspectives than from that proposed by the mainstream financial theories. The importance of social values, past experience, even feelings and intuition appears to override the importance of risk – return thinking. Even financial experts providing wealth management services to consumers believed that non-rational motives dominate consumers’ perceptions, when they were asked to describe how they consider consumers to perceive wealth. The new concept proposed in this paper, hidden wealth, was coined to describe these findings. The financial / monetary and risk – return characteristics of wealth appear to be hidden under the other characteristics of wealth in the minds of consumers. This finding has interesting implications for future research. In next section, we discuss the theoretical background of our study. Although we discuss several theories we have adopted an exploratory approach with the aim to understand what consumers perceive as wealth and what motives drive their wealth management behavior in managing housing (owner occupied apartments) assets, interest-bearing assets, investments in listed stock assets, and investments in voluntary pension fund assets. In section 3, we address methodological issues. We conducted two types of empirical investigations; qualitative data gathering through consumer panel discussions and financial expert interviews, and quantitative data gathering through financial expert and consumer surveys. The fourth section provides answers to the two research questions and presents other related results of this ongoing research. We end the article by presenting conclusions including remarks on the limitations of our research as well as implications for future research and for practitioners. 2. Theoretical Background Research on how and why consumers decide to use various financial services is an important research topic both from practical and theoretical perspectives. The complexity of financial instruments and financial services makes the selection of suitable instruments and financial service provider(s) a challenging task for a consumer. Furthermore, these decisions require significant commitment from the consumer and the outcomes of decisions fundamentally impact the consumer’s well being. According to UNU-WIDER (2006), there are major variations in the composition of assets between countries, resulting from different influences on household behavior such as market structure, regulation, and cultural preferences. Since our study explores the wealth perceptions of Finnish consumers, the

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impacts of these factors should be kept in mind. According to the wealth surveys collected by the Statistics Finland (2007), housing and property assets (i.e. real assets) represented 2/3 of the wealth of Finnish households in 2004. The remaining 1/3 were financial assets with the following composition: 44 % were in various types of interest baring savings accounts, 41 % in equity assets and the rest in other types of financial assets. Many studies, which investigate consumer behavior in financial markets, are quantitative, exploring, for example, trends in wealth accumulation. Lately studies using qualitative methods have also emerged (e.g. Harrison et al., 2006; Howcroft, 2003; Durkin, 2004). Similarly, there are several streams of theories, which explain how consumers make financial decisions. Mainstream financial theories with rational decision-making and risk - return tradeoff assumptions are considered influential determinants of consumers’ behavior. However, behavioral finance approach has become increasingly common (e.g.Kahneman and Tversky, 1979; Thaler, 1985). The idea is not to criticize proposed theories but to use and integrate them to the extent possible while trying to detect and understand how consumers actually behave in the financial markets. We follow this exploratory approach with the objective to detect and understand what consumers perceive as wealth and what motives drive their wealth management behavior. While doing this, it is important to understand mainstream financial decision-making and consumer research decision-making theories, since they were used as one source of input in the design of instruments used to collect and analyze data. 2.1 Financial theory and behavioral finance According to Brealey – Meyers (1991, pp. 155-160), the most important assumption of modern finance theory is the hypothesis of efficient markets, i.e. three forms of market efficiency and the impossibility to use previous information to predict future price trends (Roberts, 1967, Fama, 1965; Fama, 1970). The hypothesis of efficient markets is based on the assumptions of rational, value maximizing consumers (homo economicus) and the availability of perfect market information. Capital asset pricing model (CAPM), which also builds on the idea of an efficient frontier (Markowitz, 1952; Sharpe, 1965), is another cornerstone of modern finance theory. According to CAPM, every investor should invest in the market portfolio – holding a portfolio consisting of all existing securities in proportion to their market capitalization since investors are only compensated for taking necessary risks, but not for taking unnecessary risk. The combination of Markowitz’s idea of diversification with Sharpe’s CAPM produced a powerful solution that by holding a group of securities in a portfolio, one could eliminate the companyspecific risk, leaving only the market-related risk. It is thus possible for an investor to have a portfolio of the desired risk level with respect to the market and with a higher return than the return on any individual stock. These ideas characterize the risk - return thinking of mainstream financial theories. Research on investment behavior builds largely on cognitive psychology. Typical research topics include how investment decisions are made and whether or not financial markets are efficient, that is, do financial markets offer arbitrage opportunities. A typical assumption is that all consumers are not fully rational, rather their rationality is bounded (Simon, 1955). Consumers with bounded rationality experience limitations and difficulties when they solve complex problems and process information. From the concept of bounded rationality there is mentally only a short distance to behavioral finance, where the idea is to detect and understand how actors (consumers) really behave on the financial markets. Departures from rationality emerge both in judgment and in choice. Some illustrative examples on how judgment diverges from rationality are: overconfidence, optimism, anchoring, extrapolation, and making judgments of frequency or likelihood based on salience (the availability heuristic) or similarity (the representativeness heuristic) (see Kahneman et al., 1982). Many of the departures from rational choice are captured by prospect theory (Kahneman and Tversky, 1979), a purely descriptive theory of how people make choices under uncertainty.

2.2. Consumer behavior and social psychological theories

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According to Mowen (1988), consumer purchase decisions may be viewed from three perspectives: i) the decision-making perspective; ii) the experiential perspective, and iii) the behavioral influence perspective. Probably the majority of research on consumer behavior has investigated consumers from decision-making perspective. Simon’s (1957) three-step process model of problem identification, information gathering, and choice preceded several consumer decision-making behavior models (e.g. Nicosia, 1966; Howard and Sheth, 1969; Engel et al., 1968). The experiential perspective (Mowen, 1988) emphasizes the role of feelings and emotions, such as the pleasure of shopping experience. This perspective proposes that the act of a purchase decision cannot be explained only as rational and economic behavior and that in addition to social and economic factors also other factors impact purchase decision behavior. The TRA (Fishbein and Ajzen, 1985) and TPB (Ajzen, 1991) theories propose that various sources of perceived values and beliefs lead through a cognitive process to attitudes towards behavior, which impact behavioral intentions and behavior. Foxall’s behavioral perspectives model (1993) of purchase and consumption links the patterns of consumer choice to their differing environmental consequences. In addition to conscious factors also experience and situational factors are proposed to impact behavior and the direct influence of environmental forces on decisions is emphasized. In some recent studies, efforts have been made to link several perspectives. For example, Wang (2006) investigated how emotional and rational preferences impact decision-making in situations where they provide consistent and inconsistent preferences and detected that they have differential effects on risky choices if they are inconsistent. According to Seo and Barrett (2007), individuals who experience more intense feelings, achieve higher decision-making performance, and consumers who are better able to identify and distinguish among their current feelings, achieve higher decision-making performance via their enhanced ability to control the possible biases induced by those feelings. 3. Methodology We applied both qualitative and quantitative data collection methods in our research. These methods were used in a complementary way as described by Bryman (1988). Qualitative methods provide rich and elaborate information about consumer wealth and wealth management perceptions, and quantitative methods provide additional affirmative (or falsifying) results with better potential for generalization. Due to the complementary nature of methods used we also have better conceptually verified data collection instruments. The motive of the dyadic nature of our research – the collection of empirical data both from consumers and experts providing financial services to consumers – is also to use these data sources in a similar complementary way and to even further conceptually verify instruments used in data collection. Methodologically the expert interviews and consumer panel discussions had three objectives. (1) To detect whether or not consumers perceive wealth and wealth management with concepts used in finance, behavioral finance, consumer behavior and social psychological literature as well as what other concept they use or are believed to use. (2) To compare consumers’ and wealth management service professionals’ perceptions. (3) To use the results of the interviews and panels in the development and conceptual verification of the consumer survey questionnaire. Similar themes were designed for six consumer panels with 33 participants and for eleven expert interviews. The profiles of the consumer panels varied and experts were selected from various organizational levels. Table 1 shows the profiles of both participant groups. Consumer panel discussions and expert interviews lasted on average 1.5 hours, were recorded on audiotapes, and transcribed into text format from the tapes for analysis purposes.

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Table 1: Consumer panel and expert interview participants Consumer panels Expert interviews Number of participants 33 11 Number of female 17 3 Average age of participants 50 (range 27 - 78) 41 (range 30 - 46) Financial work experience (avg. in years) 17 The financial expert survey was conducted after the expert interviews and consumer panels and prior to the consumer survey. Methodologically, the expert survey was used as yet another means to develop and conceptually validate the instruments of the consumer survey. In addition to activities described above, the development of the consumer survey questionnaire included several iterations where our researcher colleagues as well as experts working in various financial service providers and other enterprises evaluated critically our questionnaire. The 43 responses to the expert survey were collected from the participants of a seminar and a course involving marketing managers and customer service specialists of financial service providers. All participants of these two events responded to the survey. The self-administered consumer questionnaire survey was mailed in a two- round- survey to 3000 retail banking customers of a large Finnish financial service provider. The customer data of the financial service provider was used to make sure that the respondents have sufficient amount of wealth and income for the survey to be meaningful for them. Table 2 provides information about the respondents of the consumer survey. The average age of the respondents was 49 years and gender distribution was fairly equal. However, education, income and personal wealth levels were higher than for Finnish consumers on average. Table 2: Consumer questionnaire sample characteristics (n = 702) Characteristics Percentage Characteristics Age Income 25 - 29 5.43 Below 30 000 € 30 - 39 18.14 30 001 - 40 000 € 40 - 49 24.57 40 001 - 50 000 € 50 - 59 32.85 Above 50 001 € 50 - 69 16.43 Personal wealth 70 - 76 2.57 Below 50 000 Gender 50 001 – 100 000 Male 55.56 100 001 – 250 000 Female 44.44 250 001 – 500 000 Above 500 000 Education Primary school 11.25 Place of residence High school Center of a city (more than 2.42 100 000 inhabitants) Vocational training Suburb of a city (more than 43.73 100 000 inhabitants) Polytechnic 17.95 Suburb of a smaller town University 24.64 Rural municipality

Percentage 38.54 36.53 13.32 11.46 18.99 30.43 32.75 13.91 3.77 4.88 11.62 56.24 27.12

4. Results In the following, we concentrate on consumer perspective. The perceptions of financial experts are covered only to the extent they differ considerably from consumer perceptions or provide otherwise interesting additional insight. As a whole, financial experts’ beliefs about consumer wealth perceptions

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reflected well consumers’ perceptions leading us to believe that financial experts seemed to understand fairly well what motivates consumers to operate on the financial markets. 4.1 Consumer panel discussions and expert interviews – wealth perceptions In the beginning of the panel discussions, consumers were asked to describe what they perceive as wealth. Accommodation was typically the first item mentioned, and housing loans and housing purchases were discussed lively. This finding reflects the importance of housing decisions in the life of a typical Finnish consumer. The following two quotes are descriptive: ”I suppose that everyone has the same list in mind. It starts from the apartment one lives in and maybe from the car, summerhouse and the bank account”. [C1, 5] “I think that apartment is more – it is wealth – but it is utility and a must as well”. [C3, 14] Especially elderly consumers wanted to include human capabilities, health and good relationships with family members and friends into the concept of wealth. Various types of real and financial assets were mentioned, ranging from art and intellectual property rights to options and reverse mortgage loans. In summary, wealth was clearly an important topic to the participating consumers, and their understanding of wealth was significantly broader than its mere financial value. However, possession of wealth aroused also negative feelings and concern about maintaining the value of property. A participant that had recently received inheritance commented: “Too much wealth makes you worry, too. One has to frequently pay attention to the management of the fortune.”[C2, 10] When financial assets were discussed, especially mutual funds, investment in voluntary pension fund savings and direct investments into listed stock produced varied opinions. Mutual funds were perceived as relatively easy, regular investments of low financial value per transaction (minimum 30 € per month) with “automatic” risk diversification. On the other hand, the costs of mutual funds were not perceived transparent enough. Investments in voluntary pension fund savings were perceived to be less favorable to consumers, even though participants believed that by the time of their retirement the legislation based compulsory pensions would be fairly low. The perceived high costs attached to investments into voluntary pension funds were the main reason for the concerns of the panelists. Many participants considered direct investments into listed stock as too risky and too demanding in terms of effort and knowledge needed. Those who had invested into stock markets usually had a stock portfolio. Many of them told that the trigger for stock investments came from traditions learnt at home. Many also saw stock investments as a hobby and said that they only invest funds that they could, in principle, afford to loose. In summary, after housing had been mentioned, various financial assets were often mentioned as wealth. Housing and various financial assets were, however, described with dissimilar terms. Although financial value was discussed more in the context of financial assets, other aspects of wealth were also given. The dominant goal of wealth management was security. Security was the first motive mentioned by the participants when they were asked to discuss their expectations of wealth management. Furthermore, the content of the security concept was understood very broadly. Security was conceptualized as safety for the rainy day, safety for one’s retirement days, access to extra funds in the case of falling ill, ability to help one’s children, ability to make use of an inexpensive vacation opportunity, or the ability to use a good bargain opportunity. The participating consumers expected decent, not maximum return, from wealth. Consumers seldom talked about risk in conjunction of return – or at all. The concept of risk appears to have negative connotations whereas security does not. Financial experts, on the other hand, emphasized risk - return tradeoff and their need to educate consumers. Expectations on various wealth classes differed as well. For example summerhouses or golf-stocks were purchased to enhance one’s quality of life. Their financial return was of marginal interest even thought both assets have financial value and well-functioning markets. Willingness to show wealth to neighbors and friends was also mentioned a few times. In summary, goals proposed by financial theories for wealth management were not perceived important by participating consumers, nor did they perceive the connection between risk and return. Safety was the most important wealth expectation and it was

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largely described in terms of social values and well-being. After the panel discussions and the expert interviews, we started to use the concept of hidden wealth in order to describe these findings. 4.2 Consumer and expert questionnaire surveys – wealth management motives To verify the findings, which led to the introduction of the hidden wealth concept, and to better understand consumer’s wealth and wealth management perceptions, we organized a consumer questionnaire survey. In this article, we only present the results related to consumers’ wealth management motives. Since the expert questionnaire survey was one of the development steps of the questionnaire instrument, we present those results as well. As one of the themes of the survey we asked the respondents to answer to the following question. “Consider yourself into a situation where you are contemplating the acquisition and management of wealth after having surprisingly received wealth. Please, answer to the following statements: When I make decisions concerning wealth and its management it is important to me, that: …” Each respondent was then asked to evaluate the importance of 15 statements on a Likert scale with anchors at 1 (not at all important) and 7 (extremely important). The 15 statements are shown as the first column of Table 3, the number of respondents and results in the subsequent columns of Table 3. Table 3: Motives of wealth and wealth management decisions Motive of wealth and wealth management N (cons Consumer Consumer decision / expert) AVG STD My wealth is protected against damages and 679 / 43 6.07 1.090 theft My wealth keeps its value as well as possible 679 / 43 6.03 1.139 My wealth is managed by a highly skilled, 677 / na 5.99 1.254 knowledgeable service provider My wealth allows the continuation of sufficient 680 / na 5.98 1.146 quality of life when I’m retired from work My wealth makes it possible to live in the way 678 / 43 5.95 1.175 and the area I prefer The management of my wealth is as easy as 682 / 43 5.94 1.118 possible My wealth provides security for the rainy day 680 / 43 5.90 1.203 The management of my wealth is as 678 / 43 5.85 1.239 inexpensive as possible The wealth I have inherited remains in my, my 676 / 43 5.83 1.458 family’s or my relatives’ possession With my wealth I am able to help my children 678 / 43 5.59 1.707 or my grandchildren in their lives The value of my wealth grows as much as 657 / 43 5.56 1.362 possible without the risk of value loss My wealth makes it possible to spend leisure 677 / 43 5.54 1.394 time in the place and in the way I prefer My wealth can be converted into money easily 677 / 43 5.52 1.327 when needed My wealth is diversified into various types of 671 / 43 5.24 1.400 assets to reduce risk The value of my wealth grows as much as 657 / 43 3.63 1.625 possible including the risk of value loss

Expert AVG

Expert STD

4.8

1.366

6.0

0.854

4.1

1.590

5.6

0.989

5.5

1.131

4.7

1.326

5.9

1.148

5.0

1.148

5.8

0.982

4.2

1.340

5.1

1.026

4.1

1.659

3.6

1.196

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In Table 3, the statements (variables) are rank-ordered according to the importance to the consumer respondents. The financial expert questionnaire had also 15 motive statements but the wording of two statements was changed for the consumer questionnaire leaving 13 corresponding entries for analysis. The results of the two surveys shown in Table 3 verify the findings that led to the introduction of the hidden value concept. Motives – wealth management expectations – perceived important by consumers and experts relate to the use of wealth and reflect social values and well-being. Motives offered by financial theories, especially the risk – return relationship does not appear to drive consumers’ wealth management perception and decision behavior. In the consumer survey, we also asked respondent to indicate what aspects of wealth they perceived important in conjunction of four asset classes (owner-occupied house, interest bearing savings, investments in listed stocks, and investments in voluntary pension fund savings). To do this consumers were asked to allocate 100 points between four alternatives: i) This wealth category is an item, which impacts the quality of my life, ii) an item, which provides me security for the rainy day, iii) an item, which is a part of my total wealth portfolio, and iv) an item, which I expect to rise in value as much as possible. The results are shown in Table 4 (the number of observations is reported in parentheses). The respondents perceived the four investigated wealth classes very differently. Apartment was mainly linked to quality of life with expected growth in value perceived as the least significant aspect of wealth. Finnish consumers clearly regard their houses as homes and appreciate the quality of life that owner-occupied homes are perceived to bring. Interest bearing savings and voluntary pension fund savings scored highest in providing security for the rainy day. Respectively, investments in listed stock were the only wealth category, which scored highest in expected value increase. Even in the case of investments into listed stocks, security motive was also evident. As the majority of wealth owned by Finnish consumers is in housing (apartment) assets, the concept of hidden wealth seems to describe well the wealth perceptions and wealth management decision motives of these consumers. Table 4: Perceived aspects of assets categories I consider this particular wealth class: Apartment Interest Investments (100 points divided between the four (house, bearing in listed alternatives) flat, etc.) savings; stock; mean mean mean My ownership of this wealth class 39.82 (642) 23.14 (553) 16.51 (443) impacts the quality of my life My ownership of this wealth class 24.21 (609) 35.35 (591) 27.57 (483) provides me security for a rainy day My ownership of this wealth class is a 26.12 (628) 24.97 (577) 26.58 (485) part of my total wealth portfolio I expect the value of this wealth class 19.10 (591) 25.69 (561) 36.73 (499) which is in my ownership to grow as much as possible Total 109.25 109.15 107.39

Voluntary pension fund savings; mean 27.21 (455) 36.62 (469) 19.43 (437) 23.00 (434) 106.26

When consumers were inquired about their dominant way of making decisions regarding wealth management, nearly 40 % of the consumers regarded cognitive decision-making (acquiring new information, comparing and finally reaching decision) as their typical decision-making style. Other decision- making styles: decisions that are based on previous experiences, own knowledge and intuition, and decision that are reached after following the advice and recommendations of others were each typical for approximately 30 % of respondents as Table 5 shows. Interestingly, over 30 % of the respondents indicated that their dominant decision-making style in wealth management decisions is to follow the advice and recommendations of other persons.

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Table 5: Consumers’ typical decision-making styles in wealth management Dominant decision-making style Percentage Decisions based on previous experiences, 29.64 (n = 195) knowledge, intuition New information acquisition, comparing, decision 39.67 (n = 261) making Following advice and recommendation that I have 30.70 (n = 202) received Table 6 lists the rank-order of information sources used by the respondents in wealth management decisions. Each respondent was asked to evaluate how useful each shown information source is for the respondent in making wealth management decisions. Alternatives were anchored as 1 = almost useless and 7 = very useful. This question was included in 1500 of the 3000 questionnaires; hence the lower number of responses. Personal advice from financial institutions (4.91) is perceived as the most useful information source followed by own experiences (4.81). Peer-to-peer discussion forums (2.73) and articles published online (3.52) are perceived as the least useful for making wealth management decisions. Table 6: The perceived usefulness of information sources for making wealth management decisions Useful information sources in financial decision making context AVG STD N Personal advice from financial institutions 4.91 1.375 301 Own experience (own knowledge, intuition, feelings) 4.81 1.259 299 Advice from independent financial experts 4.64 1.469 300 Print media (newspapers, magazines) 4.35 1.299 299 Web services of financial institutions 4.23 1.465 289 Experiences and advice of other consumers (family members, 4.16 1.425 296 relatives, friends) Material (e.g. brochures) from independent financial experts 4.04 1.417 295 Radio and television programs 4.03 1.394 297 Material (e.g. brochures) from financial institutions 3.98 1.353 299 Web services of independent financial experts 3.95 1.460 294 Internet articles (published with the name of the author) internet3.52 1.409 294 radio, internet-TV Investment literature 3.42 1.466 294 Internet discussion forums 2.73 1.387 292 5. Discussion and conclusions The most important results of this article are that: (1) Consumers do not perceive wealth as a unified concept or portfolio. Rather, various wealth categories are perceived differently. Housing (apartment) wealth is mainly seen in the context of quality of life. Investments in voluntary pension funds and interest bearing savings are means to increase the perceived security of a consumer. For these asset categories, the return on investment is secondary to other motives. Only investments in listed stocks are perceived firstly from the return on investment perspective. (2) The motives to manage wealth given by consumers deviate from those proposed by financial theories. Especially the link between risk and return is not present among consumers’ wealth management motives. The concept of risk has even negative connotations. It is possible that the lack of a concrete savings or investment target (as consumers mainly save and invest for the “rainy day”) may lead to the lack of perceived importance for the return on investment as proposed by Goldman (1996) in his framework on wealth management. On the basis of the evidence provided in this article, it is not possible to conclude how well social psychological TRA and TPB theories describe consumers’ wealth perceptions and related wealth management behavior. Yet, it appears that in addition to

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cognitive motives, such as the need for security, traditions and habits learned in childhood home as well as past experience, emotions and intuition are very influential antecedents of wealth management behavior. Some of these factors are difficult to describe with cognitive terms. This is also the case with strong reliance on other persons’ advice. The main limitation of this article is in its dependence on the consumers of one country. In order to conclude that wealth is hidden also in other countries, comparative research is needed. Other limitations include the preliminary descriptive statistical analysis conducted for this article and the exploratory approach with limited theoretical foundation. Despite these limitations, our article offers interesting new insight to wealth management research - partly also due to the dyadic nature of our research. For researchers, the concept of hidden wealth opens up new perspectives for future studies. The motives of wealth management behavior proposed by established theories could be challenged in future studies. For practitioners, the article offers the advice to analyze carefully how wealth management services are presented to consumers. Consumers appear confused with the complexity of instruments and services offered and approach wealth management from other perspectives than those proposed by mainstream financial theories. Understanding the behavioral needs of the situations where consumers make wealth management decisions appears as a good basis for wealth management service development. References Ajzen I. (1991) The Theory of Planned Behavior. Organizational Behavior and Human Decision Processes 50, 179–211. Ajzen I. (2002) Residual Effects of Past on Later Behavior: Habituation and Reasoned Action Perspectives. Personality and Social Psychology Review 6 (2) 107–122. Brealey R. A., Myers S. C. (1991) Principles of Corporate Finance. 4th edition, International Edition, McGrawHill Inc. Bryman, A. (1988). Quantity and quality in social research. London: Unwin Hyman. Durkin, M. (2004) In search of the Internet-banking customer: exploring the use of decision style. The International Journal of Bank Marketing 22 (6/7) 484– 503. Engel, J. F., Kollat, D. T., and Blackwell, R. D. (1968) Consumer Behavior. New York: Holt, Rinehart and Winston. Fama, E. F. (1970) Efficient Capital Markets: A Review of Theory and Empirical Work. Journal of Finance, 25 382-417. Fama, E. F. (1965) Random Walks in Stock Market Prices. Financial Analysts Journal. 21 (5) 55–59. Fishbein, M. and Ajzen, I. (1975) Belief, Attitude, Intention and Behavior: An Introduction to Theory and Research. Addison-Wesley Publishing Company, Reading, MA. Foxall, G. R. (1990) Consumer Psychology in Behavioural Perspective. International Thompson Business Press. London and New York, NY. Foxall, G. R. (1993) Situated consumer behavior: a behavioral interpretation of purchase and consumption. Research in Consumer Behaviour 6, 113–52. Goldsmith E (1996) Resource Management for Individuals and Families. Minneapolis. Harrison, T., Waite, K., White, P. (2005) Analysis by paralysis: the pension purchase decision process. International Journal of Bank Marketing 24 (1) 5–23. Howard, J. A. and Sheth, J. N. (1969) The Theory of Buyer Behavior. New York: John Wiley & Sons. Howcroft, B., Hamilton, R. and Hewer, P. (2007) Customer involvement and interaction in retail banking: an examination of risk and confidence in the purchase of financial products. Journal of Services Marketing 21 (7) 481– 491. Kahneman, D. and Tversky, A. (1979), Prospect Theory: An Analysis of Decision under Risk, Econometrica 47 (2). 263-91. Kahneman, D., Slovic, P. and Tversky, A. (1982), Judgement under Uncertainty: Heuristics and Biases, Cambridge and New York: Cambridge University Press. Markowitz, H.M. (1952) Portfolio Selection. Journal of Finance (March 1952) 7, 77–91. Mowen, J.C. (1988) Beyond consumer decision making, The Journal of Consumer Marketing. 5 (1) 15 - 25. Nicosia, F. M. (1966) Consumer Decision Processes. Englewood Cliffs, NJ: Prentice-Hall.

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