Financial Planners and the Risk Tolerance Gap

23 Pages Posted: 24 Nov 2013

See all articles by Terrance Martin

Terrance Martin

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance; Texas Tech University

Date Written: December 1, 2011

Abstract

Aligning an investor’s attitude toward risk and his investment behavior is integral to his financial well-being; however, a significant number of U.S Households do not possess the human capital necessary to adequately allocate their financial assets. This paper examine the role a financial planner plays in minimizing the risk tolerance gap i.e. the difference between an investor’s subjective and objective risk tolerance. Using the 2007 Survey of Consumer Finances, we find that the use of a financial planner reduces the likelihood that an investor would see a difference between his subjective and objective.

Keywords: financial planner, financial advice, risk tolerance, risk tolerance gap, 2007 Survey of Consumer Finances

Suggested Citation

Martin, Terrance, Financial Planners and the Risk Tolerance Gap (December 1, 2011). Available at SSRN: https://ssrn.com/abstract=2358736 or http://dx.doi.org/10.2139/ssrn.2358736

Terrance Martin (Contact Author)

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance ( email )

1201 W. University Drive
Edinburg, TX 78539-2999
United States
9402245027 (Phone)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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