Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study

Utpal Bhattacharya (), Andreas Hackethal, Simon Kaesler, Benjamin Loos and Steffen Meyer

The Review of Financial Studies, 2012, vol. 25, issue 4, 975-1032

Abstract: Working with one of the largest brokerages in Germany, we record what happens when unbiased investment advice is offered to a random set of approximately 8,000 active retail customers out of the brokerage's several hundred thousand retail customers. We find that investors who most need the financial advice are least likely to obtain it. The investors who do obtain the advice (about 5%), however, hardly follow the advice and do not improve their portfolio efficiency by much. Overall, our results imply that the mere availability of unbiased financial advice is a necessary but not sufficient condition for benefiting retail investors. The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Date: 2012
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