Trading on Advice

35 Pages Posted: 3 Nov 2010 Last revised: 31 Dec 2012

See all articles by Andreas Hackethal

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration; Leibniz Institute for Financial Research SAFE

Roman Inderst

Goethe University Frankfurt

Steffen Meyer

Aarhus University - Department of Finance; Danish Finance Institute

Multiple version iconThere are 2 versions of this paper

Date Written: December 29, 2012

Abstract

Why do retail investors trade? To analyze the impact of professional advice on trading, we combine administrative and survey data from a large German bank. Investors who report that they always rely on their advisor’s recommendations have a 25-percent-higher trading volume. Also, for investors who rely on advice the fraction of products for which their advisors received sales targets is around one third larger. Investors who rely on their advisors are less-educated and have less interest in numbers, they have less trust in their own financial expertise and more trust in that of their advisor and they are more likely to perceive the advice they receive as fair.

Keywords: Trading, Financial Advice

JEL Classification: D14, D18, G20

Suggested Citation

Hackethal, Andreas and Inderst, Roman and Meyer, Steffen, Trading on Advice (December 29, 2012). Available at SSRN: https://ssrn.com/abstract=1701777 or http://dx.doi.org/10.2139/ssrn.1701777

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Theodor-W.-Adorno Platz 3
Frankfurt am Main, 60323
Germany

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Roman Inderst (Contact Author)

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60629
Germany
+49 (69) 798-34601 (Phone)
+49 (69) 798-35000 (Fax)

HOME PAGE: http://www.wiwi.uni-frankfurt.de/en/departments/finance/lehrstuhl/prof-dr-roman-inderst/team

Steffen Meyer

Aarhus University - Department of Finance ( email )

Fuglesangs Alle 4
DK-8210 Aarhus
Denmark

Danish Finance Institute ( email )

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