Abstract

http://ssrn.com/abstract=2021883
 
 

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The Impact of Financial Advisors on the Stock Portfolios of Retail Investors


Marc Kramer


University of Groningen - Faculty of Economics and Business - Department of Economics, Econometrics & Finance

Robert Lensink


University of Groningen - Department of Economics, Econometrics and Finance; Wageningen UR - Development Economics Group

March 14, 2012


Abstract:     
This study investigates the impact of financial advisors on portfolio returns, risk, trading, and diversification using a large data set of individual Dutch equity investors, with random assignment to specific advisors. We confirm recent experimental results on the benefits of advisory interventions that control for moral hazard behavior and endogeneity as a result of self-selection. Advice improves risk-adjusted equity returns and reduces risk. In addition, advisors reduce trading activity, as proxied by the frequency of trades. This study is unique in terms of the data set, the focus on individual stocks, and the use of the Hausman-Taylor panel estimation technique.

Number of Pages in PDF File: 39

Keywords: Individual Investor Portfolio Performance, Financial Advice

JEL Classification: G11, D14, G24

working papers series





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Date posted: March 15, 2012 ; Last revised: September 3, 2012

Suggested Citation

Kramer, Marc and Lensink, Robert, The Impact of Financial Advisors on the Stock Portfolios of Retail Investors (March 14, 2012). Available at SSRN: http://ssrn.com/abstract=2021883 or http://dx.doi.org/10.2139/ssrn.2021883

Contact Information

Marc Kramer (Contact Author)
University of Groningen - Faculty of Economics and Business - Department of Economics, Econometrics & Finance ( email )
Postbus 72
9700 AB Groningen
Netherlands
Robert Lensink
University of Groningen - Department of Economics, Econometrics and Finance ( email )
P.O. Box 800
9700 AH Groningen
Netherlands
Wageningen University and Research Center (WUR) - Development Economics Group ( email )
Hollandseweg 1
WAGENINGEN, 6706 KN
Netherlands
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