Financial Advice

Roman Inderst and Marco Ottaviani

Journal of Economic Literature, 2012, vol. 50, issue 2, 494-512

Abstract: Financial advice could play an essential role in well-functioning markets for retail financial products, given that many consumers find it difficult to evaluate the complex products on offer. However, conflicts of interest, which are pervasive in some parts of the industry, can turn advice into a curse rather than a blessing for consumers, especially when consumers are not sufficiently wary. Through a simple model of financial advice, we overview the pros and cons of various policy interventions, such as imposing mandatory disclosure, banning commissions, and regulating contract cancellation terms. (JEL D14, D18, G21, G28)

JEL-codes: D14 D18 G21 G28 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/jel.50.2.494
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Citations: View citations in EconPapers (97)

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