Do Financial Advisors Charge Sustainable Investors a Premium?
149 Pages Posted: 19 Jul 2021 Last revised: 7 Dec 2022
Date Written: December 2022
Regulators have voiced concerns about price discrimination against sustainable investors, but empirical evidence is lacking. We conduct two lab-in-the-field experiments with 415 US and European professional financial advisors. We find that advisors charge sustainable investors a premium compared to conventional investors. Our experiment rules out effort, skill, and cost differences as drivers of this premium. Advisors exert equal or even less effort for sustainable investors, in terms of time spent and information considered. Importantly, advisors do not charge a premium when sustainable investors signal high financial literacy. Financial regulators evaluate our results and provide policy implications.
Keywords: Experimental Finance, Financial Advice, Sustainable Investing, Financial Literacy
JEL Classification: C93, G11
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