Demand for financial advice: Evidence from a randomized choice experiment

Boudewijn de Bruin, Olha Cherednychenko, Niels Hermes, Marc Kramer and Marco Meyer

Journal of Banking & Finance, 2024, vol. 163, issue C

Abstract: How does the salience and structure of costs for financial advice influence consumer demand? This study conducts a randomized choice experiment exploring possible consequences of introducing a commission ban in the retail mortgage market. A sample of more than 2100 participants of the Dutch Household Survey panel reveals that in a fee-based regime, in which the costs of advice are salient and must be paid upfront, demand for advice decreases by 25 % compared with a situation in which the same costs are embedded in mortgage payments. We do not find evidence that such demand effects for financial advice varies across less versus more sophisticated customers. At the same time, we do find that customers with a stronger focus on the present express less willingness to pay for advice upfront.

Keywords: Financial advice; Salience; Financial sophistication; Present focus (search for similar items in EconPapers)
JEL-codes: D14 D91 G28 G41 G51 G53 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:163:y:2024:i:c:s0378426624001109

DOI: 10.1016/j.jbankfin.2024.107193

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