Losing Trust in Money Doctors

38 Pages Posted: 20 Dec 2015 Last revised: 15 Feb 2017

See all articles by Daniel Dorn

Daniel Dorn

Drexel University - Department of Finance

Martin Weber

University of Mannheim - Department of Banking and Finance

Date Written: February 13, 2017

Abstract

Delegated stock market participation is fragile, especially during crises. Investors who had delegated all of their equity investments to fund managers before the financial crisis were almost twice as susceptible to exiting the stock market during the crisis than their peers who invested in individual stocks, other things equal. This result holds across two very different samples: 40,000 clients at a large German bank and the 2007-2009 panel of the U.S. Survey of Consumer Finances. Households who reported to rely on the advice of money doctors before the crisis, but not afterwards, were especially likely to sell all their stock funds.

Keywords: household finance, diversfication, delegated investing, stock market participation, financial crisis

JEL Classification: G01, G11

Suggested Citation

Dorn, Daniel and Weber, Martin, Losing Trust in Money Doctors (February 13, 2017). Available at SSRN: https://ssrn.com/abstract=2705435 or http://dx.doi.org/10.2139/ssrn.2705435

Daniel Dorn

Drexel University - Department of Finance ( email )

LeBow College of Business
Philadelphia, PA 19104
United States

Martin Weber (Contact Author)

University of Mannheim - Department of Banking and Finance ( email )

D-68131 Mannheim
Germany
+49 621 181 1532 (Phone)
+49 621 181 1534 (Fax)

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