Determinants of Household Broker Choice and the Impact on Performance
36 Pages Posted: 21 Aug 2015 Last revised: 28 Jul 2016
Date Written: December 11, 2015
To reconcile why a growing number of households prefer to make their own trading decisions rather than to obtain professional advice, we examine the influence of households’ demographic characteristics such as gender, age, income and education on the choice between full service and discount brokers. We find that in general education has a greater impact on broker choice for women than for men. For men trading on their own through discount retail brokers, higher income and education is associated with better risk adjusted performance. Furthermore it is found that men and women, regardless of the broker type they use, perform better with age. The improvement in performance with age is more pronounced for women than for men.
Keywords: broker choice, demographics, household investor
JEL Classification: G12, G14
Suggested Citation: Suggested Citation