Variations in investment advice provision: A study of financial advisors of millionaire investors

Ylva Baeckström, Ian W. Marsh and Joanne Silvester

Journal of Economic Behavior & Organization, 2021, vol. 188, issue C, 716-735

Abstract: Vignette methodology is used to examine how the personal characteristics of investors and financial advisors contribute to portfolio recommendations, and the judgements that advisors make about investment knowledge and control of prospective millionaire UK clients. We find that advisors use investor characteristics to make recommendations broadly in line with economic theory and regulatory requirements. However, women are judged less knowledgeable and in control of their investments than equivalent men. They also receive portfolio recommendations with slightly lower risk profiles. Portfolio recommendations vary by advisor, with experienced advisors and those with wealthier clients recommending higher risk portfolios. Unmeasured advisor variables also impact on judgements and recommendations. These findings have relevance to the wealth management industry and regulators, in focusing attention on the conscious and unconscious influences on the judgements advisors make about their clients.

Keywords: Financial advice; Investors; Risk tolerance; Vignette; Financial advisors; Gender (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:188:y:2021:i:c:p:716-735

DOI: 10.1016/j.jebo.2021.05.008

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