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

Review of Financial Studies, Forthcoming

70 Pages Posted: 24 Sep 2011

See all articles by Utpal Bhattacharya

Utpal Bhattacharya

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration; Goethe University Frankfurt - Research Center SAFE

Simon Kaesler

Goethe University Frankfurt - Department of Finance

Benjamin Loos

UTS Business School

Steffen Meyer

University of Southern Denmark - Department of Business and Economics; Danish Finance Institute

Multiple version iconThere are 2 versions of this paper

Date Written: September 23, 2011

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 roughly 8,000 of the brokerage’s several hundred thousand active 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 so do not improve their portfolio efficiency much. Overall, our results imply that the mere availability of unbiased financial advice is a necessary but not sufficient condition for benefiting retail investors.

Keywords: retail investors, brokers, financial advice, efficient portfolios

JEL Classification: D14, G11, G24, G28

Suggested Citation

Bhattacharya, Utpal and Hackethal, Andreas and Kaesler, Simon and Loos, Benjamin and Meyer, Steffen, Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study (September 23, 2011). Review of Financial Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1932824

Utpal Bhattacharya (Contact Author)

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Andreas Hackethal

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

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

Goethe University Frankfurt - Research Center SAFE ( email )

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

Simon Kaesler

Goethe University Frankfurt - Department of Finance ( email )

Grüneburgplatz 1
Frankfurt am Main, DE 60323
Germany

Benjamin Loos

UTS Business School ( email )

Haymarket
Sydney, NSW 2007
Australia

Steffen Meyer

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

Danish Finance Institute ( email )

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