Financial advice: Who Exactly Follows It?

Liron Reiter-Gavish, Mahmoud Qadan and Joseph Yagil

Research in Economics, 2021, vol. 75, issue 3, 244-258

Abstract: Using data from about 290,000 household investment accounts, we provide a comprehensive analysis of the role of personal economic and demographic characteristics in determining the tendency to utilize financial advice. Our findings indicate that investors' sophistication level, captured using several proxies, is negatively correlated with the decision to follow the financial advice received. In addition, we find that individual differences such as age, gender and family status are strongly associated with the tendency to use the advice. The findings are robust under different distributions of the data. Finally, we also test how macroeconomic uncertainty affects the tendency to utilize financial advice. Our results demonstrate that higher levels of financial uncertainty are associated with less use of financial advice.

Keywords: Investor sophistication; Financial advice; Investor literacy; Household finance (search for similar items in EconPapers)
JEL-codes: D14 G11 G41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:75:y:2021:i:3:p:244-258

DOI: 10.1016/j.rie.2021.06.003

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