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The Impact of Financial Advisors on the Subsequent Wealth of Older Adults

38 Pages Posted: 10 May 2014  

Benjamin F. Cummings

The American College of Financial Services

Russell N. James III

Texas Tech University

Date Written: March 15, 2014

Abstract

Despite the growing use of financial advisors, relatively little is known about the impact that financial advisors have on actual wealth outcomes among older adults. Using data from the Study of Assets and Health Dynamics Among the Oldest Old (AHEAD), we find that using a financial advisor is positively related to subsequent net worth, especially on net worth values more than a decade after initially reporting the use of professional financial advice. Having a financial advisor is also positively associated with current and subsequent investment returns, and a large factor impacting the difference in returns comes is due to differences in portfolio allocations. Specifically, we find evidence that the impact of a financial advisor on subsequent wealth is likely due to a greater allocation to equities.

Keywords: financial advice, household finance, financial advisor, AHEAD, equity market participation

JEL Classification: D14, D31

Suggested Citation

Cummings, Benjamin F. and James, Russell N., The Impact of Financial Advisors on the Subsequent Wealth of Older Adults (March 15, 2014). Available at SSRN: https://ssrn.com/abstract=2434267 or http://dx.doi.org/10.2139/ssrn.2434267

Benjamin F. Cummings (Contact Author)

The American College of Financial Services ( email )

270 S. Bryn Mawr Avenue
Bryn Mawr, PA 19010
United States

Russell N. James III

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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