Peter Tufano
Encyclopedia
Peter Tufano was appointed Peter Moores Dean and Professor of Finance at Saïd Business School on 1 July 2011. Previously, he spent over three decades at Harvard, earning his AB in economics (summa cum laude), MBA (with high distinction), and PhD in Business Economics degrees there, and had been on the faculty of the Harvard Business School for 22 years, most recently as the Sylvan C. Coleman Professor of Financial Management. Tufano is a prolific scholar and course developer, a seasoned administrator and manager, a social entrepreneur, and an advisor to business and government leaders.
As an administrator and manager, Tufano has assumed a number of leadership roles at Harvard, serving as department chair, course head, and Senior Associate Dean; he has overseen the school’s tenure and promotion processes, its campus planning, crafted a strategy for university engagement, and advised the University on financial and real estate matters. He most recently was the Founding Co-Chair of the Harvard innovation lab (i-lab), a cross-university initiative to foster entrepreneurship and well as a Co-Chair of the Allston Task Force, a group convened by President Faust to lay out a future for Harvard’s major land holdings in Allston.
Professor Tufano, 54, is married with one daughter, a student at Harvard College. His wife, Mary Jeanne Tufano, is an attorney, arbitrator, and mediator.
Research and Engagement
In his research and engagement with the business and policy communities, Tufano’s work centers on three major topics: Consumer Finance; Risk Management and Corporate Financial Engineering; and Mutual Funds. For a full listing of his work, see his curriculum vitae.
Over the past decade, Tufano has worked to advance the academic field of consumer finance, with a particular emphasis on applying research insights to better meet the financial service needs of everyday households. This work, blending finance, psychology, sociology, history, and management, has influenced businesses and policy makers, leading to two changes in US federal tax policy, new models for savings products, and new approaches to financial education. His July 2011 Harvard Business Review article, written with three Harvard colleagues, provides advice to the head of the new US Consumer Financial Protection Bureau, and his newest work looks financial fragility of households across the world as well as consumer responses to new credit card disclosures. To support other researchers in this nascent field, Tufano co-founded the National Bureau of Economic Research’s Household Finance working group. He has brought consumer finance into the classroom, collaborating to create a joint HBS and Harvard Law School offering on the topic. He is an advisor to businesses and policymakers about consumer finance issues, including sitting on the FDIC’s Advisory Committee on Economic Inclusion and more recently accepting a similar role in the UK as an academic advisor to the Behavioral Insights Team that is applying behavioural economics principles to regulation. Finally, as a social entrepreneur, Tufano founded and chairs a ten year old nonprofit (Doorways to Dreams Fund, www.d2dfund.org) that works with partner organizations to test and promote innovations to serve low income households’ financial needs.
Tufano’s second stream of work focuses on risk management and financial engineering. This work has been published in top academic journals, as well as the Harvard Business Review, and a variety of books. His paper on risk management practices in the gold mining industry shared the Smith-Breeden prize for the best paper published in the Journal of Finance. He developed an MBA course on Corporate Financial Engineering, co-authored a casebook on this topic, and engages with businesses around these issues. In particular, he is a Trustee and member of the Executive Committee of the Global Association of Risk Professionals.
His work in mutual funds, especially his cross country research on mutual fund fees and the apparent benefits of broker-sold funds, has led to lively debate among business people and regulators. Tufano served as Independent Distribution Consultant to the SEC and the Commonwealth of Massachusetts in regard to market timing issues, and currently serves as an independent director of various mutual funds.
Teaching and Course Development
As an educator, Tufano developed over 50 case studies, and created three new courses at Harvard for MBAs. For a full listing of his case studies, see his curriculum vitae. He has also offered versions of these courses in various Executive Education programmes:
This elective course for MBA and law students was co-developed and co-taught with Howell Jackson, Professor at Harvard Law School, and was cross-university offering. The course introduces students to the multi-trillion dollar consumer finance sector which spans all of the major business providing four key functions: payments, savings, borrowing, and risk management. The course adopts three frames of reference: the consumer, the business, and the political economy. The consumer element of the course introduces students to the economic, psychological, and sociological elements that affect the needs, preferences and decision making of consumers. The business element of the course examines business strategies, economic models, and bases of competition in the sector. The political economy aspect of the course examines the rationales for, design of, and implementation of laws and regulations in the sector.
This elective MBA offering examines how financial managers can responsibly use new capital markets technologies to advance their corporate strategies, by: (1) managing financial risks and position firms to exploit strategic opportunities; (2) lowering firms' financing costs (by tailoring securities for particular investors' needs; (3) signaling information; (4) structuring incentives; and (5) substituting for or complement product market decisions. These activities are often implemented through risk management programs and security issues. The course deals with the design and pricing of a wide range of instruments and the design and operation of risk management programs at firms. While the primary educational objective is to study the applications of financial engineering, an equally important objective is to give students a technical introduction to the understanding the building blocks of derivatives, especially options.
This required Finance course taken by all MBA students was introduced as part of a major redesign of the finance curriculum. This second required course focused on critical corporate decisions: How should a firm set and evaluate its financial policies? How should it evaluate complex investment decisions? How should it integrate these decisions with one another and with its broader business strategy, especially in global settings? Beyond the traditional corporate finance and valuation concepts, the course emphasized a few core ideas: (a) the law of one price (a fundamental building block for valuation and financial policy making); (b)the imperfections matrix (a single set of frictions that routinely influence financial policies); (c) options as a metaphor for flexibility; and (d) the functional perspective (analyzing financial institutions and products in terms of the core financial functions they serve, rather than focus on institutional descriptions.)
Recent Engagement with the Media and Impact
Tufano, along with Annamaria Lusardi (George Washington University) and Daniel Schneider (Princeton) and in conjunction with the market research firm TNS, has been studying the ability of households to have the financial resources to cope with modest emergencies. (USD$2000 in 30 days). This work is forthcoming in a Brookings Papers on Economic Activity volume, but has been cited in a number of press articles and by regulators.
Tufano has studied the ability of prize linked savings (akin to UK Premium bonds) to help low income families save. This work was published in the American Economic Review, Economics Letters, and book chapters, and was done in conjunction with D2D Fund, which Tufano co-founded. So far, the work has led to both media attention, including the Freakonomics coverage below—and indirectly led to changes in policies in X states.
Tufano’s research over the last few years has focused on the potential to harness US federal tax refunds to stimulate savings by low to moderate income Americans. This research was published for both scholars and policymakers in a variety of outlets ranging from Tax Notes, NBER Tax Policy and the Economy, the Washington Post, and is forthcoming in the American Economic Journal. It is often credited with leading to two innovations in federal tax policy: the creation of IRS Form 8888, which allows refund recipients to “save some and spend some,” and President Obama’s announcement in September 2009 make it easy for refund recipients to buy US Savings Bonds.
For President Obama's September 5, 2009 announcement of the change in savings bond policy, click here.
For the text of his announcement, click here.
Save Some/Spend Some research is cited in a January 31, 2005 letter from Members of Congress to the IRS, requesting that the IRS move forward on a split refunds proposal.
Commissioner Everson's reply to Members of Congress.
On May 31, 2006, the IRS announced that it will roll out split refunds in January 2007.
IRS form 8888, introduced January 2007, implements the split refund concept for all Americans.
Tufano’s work looks at the existing levels of financial knowledge by consumers—and new ways to boost that knowledge through new delivery channels, including what he calls “financial entertainment” (embedding financial lessons in fun media like videogames) and leveraging college admissions testing.
Tufano was the Founding Co-Chair of the Harvard Innovation Lab, a new facility in Allston that will serve as the nexus for entrepreneurial activity for students across Harvard University and will support small business development in Boston.
Tufano was one of the co-chairs of this group, appointed by Harvard President Drew Faust, to assemble a set of proposals for the development of a massive site in Allston, next to Harvard Business School. The group issued its recommendations in June 2011
http://www.sbs.ox.ac.uk/about/Pages/deanoverview.aspx
1.Financial Fragility of Households.
http://blogs.forbes.com/tombarlow/2011/06/21/only-1-in-4-americans-confident-they-could-cover-unplanned-2000-expense/
http://www.springfieldnewssun.com/news/springfield-news/in-a-pinch-could-your-family-find-2-000--1182267.html
http://www.nytimes.com/2010/08/17/health/policy/17health.html
2.Prize Linked Savings
http://www.freakonomics.com/2010/11/18/freakonomics-radio-could-a-lottery-be-the-answer-to-americas-poor-savings-rate/
http://www.freakonomics.com/2010/12/02/freakonomics-radio-who-could-say-no-to-a-no-lose-lottery/
3.Harvard Innovation Lab
http://harvardmagazine.com/2010/10/education-and-entrepreneurship-plans-for-harvard-in-allston?page=0,1
http://news.harvard.edu/gazette/story/2010/10/hbs_gift/
http://news.harvard.edu/gazette/story/2011/02/innovate-create/
4.New Ways to Build Financial Capabilities
http://www.marketwatch.com/story/its-time-to-change-how-we-teach-investors-2011-06-07?reflink=MW_news_stmp
5.Harvard Allston Work Team
http://articles.boston.com/2011-06-16/news/29666051_1_drew-faust-allston-innovation-lab
http://news.harvard.edu/gazette/story/2011/06/qa-on-harvard-in-allston/
Biography
Tufano’s recent research, course development, and engagement with business and policy audiences is primarily focused on topics around consumer finance, and is aimed at understanding how this vital sector of the economy works—and can work better. He has been at the forefront of advancing this academic field and then helped bring ideas from research into practice by founding an innovative nonprofit and working directly with businesses and policymakers. His work is credited with influencing two US policy initiatives and a new class of savings products in the US. His other streams of work deal with risk management, financial engineering, and mutual funds.As an administrator and manager, Tufano has assumed a number of leadership roles at Harvard, serving as department chair, course head, and Senior Associate Dean; he has overseen the school’s tenure and promotion processes, its campus planning, crafted a strategy for university engagement, and advised the University on financial and real estate matters. He most recently was the Founding Co-Chair of the Harvard innovation lab (i-lab), a cross-university initiative to foster entrepreneurship and well as a Co-Chair of the Allston Task Force, a group convened by President Faust to lay out a future for Harvard’s major land holdings in Allston.
Professor Tufano, 54, is married with one daughter, a student at Harvard College. His wife, Mary Jeanne Tufano, is an attorney, arbitrator, and mediator.
Research and Engagement
In his research and engagement with the business and policy communities, Tufano’s work centers on three major topics: Consumer Finance; Risk Management and Corporate Financial Engineering; and Mutual Funds. For a full listing of his work, see his curriculum vitae.
- Consumer Finance
Over the past decade, Tufano has worked to advance the academic field of consumer finance, with a particular emphasis on applying research insights to better meet the financial service needs of everyday households. This work, blending finance, psychology, sociology, history, and management, has influenced businesses and policy makers, leading to two changes in US federal tax policy, new models for savings products, and new approaches to financial education. His July 2011 Harvard Business Review article, written with three Harvard colleagues, provides advice to the head of the new US Consumer Financial Protection Bureau, and his newest work looks financial fragility of households across the world as well as consumer responses to new credit card disclosures. To support other researchers in this nascent field, Tufano co-founded the National Bureau of Economic Research’s Household Finance working group. He has brought consumer finance into the classroom, collaborating to create a joint HBS and Harvard Law School offering on the topic. He is an advisor to businesses and policymakers about consumer finance issues, including sitting on the FDIC’s Advisory Committee on Economic Inclusion and more recently accepting a similar role in the UK as an academic advisor to the Behavioral Insights Team that is applying behavioural economics principles to regulation. Finally, as a social entrepreneur, Tufano founded and chairs a ten year old nonprofit (Doorways to Dreams Fund, www.d2dfund.org) that works with partner organizations to test and promote innovations to serve low income households’ financial needs.
- Risk Management and Financial Engineering
Tufano’s second stream of work focuses on risk management and financial engineering. This work has been published in top academic journals, as well as the Harvard Business Review, and a variety of books. His paper on risk management practices in the gold mining industry shared the Smith-Breeden prize for the best paper published in the Journal of Finance. He developed an MBA course on Corporate Financial Engineering, co-authored a casebook on this topic, and engages with businesses around these issues. In particular, he is a Trustee and member of the Executive Committee of the Global Association of Risk Professionals.
- Mutual Funds
His work in mutual funds, especially his cross country research on mutual fund fees and the apparent benefits of broker-sold funds, has led to lively debate among business people and regulators. Tufano served as Independent Distribution Consultant to the SEC and the Commonwealth of Massachusetts in regard to market timing issues, and currently serves as an independent director of various mutual funds.
Teaching and Course Development
As an educator, Tufano developed over 50 case studies, and created three new courses at Harvard for MBAs. For a full listing of his case studies, see his curriculum vitae. He has also offered versions of these courses in various Executive Education programmes:
- Consumer Finance
This elective course for MBA and law students was co-developed and co-taught with Howell Jackson, Professor at Harvard Law School, and was cross-university offering. The course introduces students to the multi-trillion dollar consumer finance sector which spans all of the major business providing four key functions: payments, savings, borrowing, and risk management. The course adopts three frames of reference: the consumer, the business, and the political economy. The consumer element of the course introduces students to the economic, psychological, and sociological elements that affect the needs, preferences and decision making of consumers. The business element of the course examines business strategies, economic models, and bases of competition in the sector. The political economy aspect of the course examines the rationales for, design of, and implementation of laws and regulations in the sector.
- Corporate Financial Engineering
This elective MBA offering examines how financial managers can responsibly use new capital markets technologies to advance their corporate strategies, by: (1) managing financial risks and position firms to exploit strategic opportunities; (2) lowering firms' financing costs (by tailoring securities for particular investors' needs; (3) signaling information; (4) structuring incentives; and (5) substituting for or complement product market decisions. These activities are often implemented through risk management programs and security issues. The course deals with the design and pricing of a wide range of instruments and the design and operation of risk management programs at firms. While the primary educational objective is to study the applications of financial engineering, an equally important objective is to give students a technical introduction to the understanding the building blocks of derivatives, especially options.
- Finance 2
This required Finance course taken by all MBA students was introduced as part of a major redesign of the finance curriculum. This second required course focused on critical corporate decisions: How should a firm set and evaluate its financial policies? How should it evaluate complex investment decisions? How should it integrate these decisions with one another and with its broader business strategy, especially in global settings? Beyond the traditional corporate finance and valuation concepts, the course emphasized a few core ideas: (a) the law of one price (a fundamental building block for valuation and financial policy making); (b)the imperfections matrix (a single set of frictions that routinely influence financial policies); (c) options as a metaphor for flexibility; and (d) the functional perspective (analyzing financial institutions and products in terms of the core financial functions they serve, rather than focus on institutional descriptions.)
Recent Engagement with the Media and Impact
- Financial Fragility of Households.
Tufano, along with Annamaria Lusardi (George Washington University) and Daniel Schneider (Princeton) and in conjunction with the market research firm TNS, has been studying the ability of households to have the financial resources to cope with modest emergencies. (USD$2000 in 30 days). This work is forthcoming in a Brookings Papers on Economic Activity volume, but has been cited in a number of press articles and by regulators.
- Prize Linked Savings
Tufano has studied the ability of prize linked savings (akin to UK Premium bonds) to help low income families save. This work was published in the American Economic Review, Economics Letters, and book chapters, and was done in conjunction with D2D Fund, which Tufano co-founded. So far, the work has led to both media attention, including the Freakonomics coverage below—and indirectly led to changes in policies in X states.
- Tax-Time Savings.
Tufano’s research over the last few years has focused on the potential to harness US federal tax refunds to stimulate savings by low to moderate income Americans. This research was published for both scholars and policymakers in a variety of outlets ranging from Tax Notes, NBER Tax Policy and the Economy, the Washington Post, and is forthcoming in the American Economic Journal. It is often credited with leading to two innovations in federal tax policy: the creation of IRS Form 8888, which allows refund recipients to “save some and spend some,” and President Obama’s announcement in September 2009 make it easy for refund recipients to buy US Savings Bonds.
For President Obama's September 5, 2009 announcement of the change in savings bond policy, click here.
For the text of his announcement, click here.
Save Some/Spend Some research is cited in a January 31, 2005 letter from Members of Congress to the IRS, requesting that the IRS move forward on a split refunds proposal.
Commissioner Everson's reply to Members of Congress.
On May 31, 2006, the IRS announced that it will roll out split refunds in January 2007.
IRS form 8888, introduced January 2007, implements the split refund concept for all Americans.
- New Ways to Build Financial Capabilities
Tufano’s work looks at the existing levels of financial knowledge by consumers—and new ways to boost that knowledge through new delivery channels, including what he calls “financial entertainment” (embedding financial lessons in fun media like videogames) and leveraging college admissions testing.
- Harvard Innovation Lab
Tufano was the Founding Co-Chair of the Harvard Innovation Lab, a new facility in Allston that will serve as the nexus for entrepreneurial activity for students across Harvard University and will support small business development in Boston.
- Harvard Allston Work Team
Tufano was one of the co-chairs of this group, appointed by Harvard President Drew Faust, to assemble a set of proposals for the development of a massive site in Allston, next to Harvard Business School. The group issued its recommendations in June 2011
External Links
Saïd Business School Dean pageshttp://www.sbs.ox.ac.uk/about/Pages/deanoverview.aspx
1.Financial Fragility of Households.
http://blogs.forbes.com/tombarlow/2011/06/21/only-1-in-4-americans-confident-they-could-cover-unplanned-2000-expense/
http://www.springfieldnewssun.com/news/springfield-news/in-a-pinch-could-your-family-find-2-000--1182267.html
http://www.nytimes.com/2010/08/17/health/policy/17health.html
2.Prize Linked Savings
http://www.freakonomics.com/2010/11/18/freakonomics-radio-could-a-lottery-be-the-answer-to-americas-poor-savings-rate/
http://www.freakonomics.com/2010/12/02/freakonomics-radio-who-could-say-no-to-a-no-lose-lottery/
3.Harvard Innovation Lab
http://harvardmagazine.com/2010/10/education-and-entrepreneurship-plans-for-harvard-in-allston?page=0,1
http://news.harvard.edu/gazette/story/2010/10/hbs_gift/
http://news.harvard.edu/gazette/story/2011/02/innovate-create/
4.New Ways to Build Financial Capabilities
http://www.marketwatch.com/story/its-time-to-change-how-we-teach-investors-2011-06-07?reflink=MW_news_stmp
5.Harvard Allston Work Team
http://articles.boston.com/2011-06-16/news/29666051_1_drew-faust-allston-innovation-lab
http://news.harvard.edu/gazette/story/2011/06/qa-on-harvard-in-allston/