Third Party Quality Certification in the Market for Financial Advice

57 Pages Posted: 11 Jul 2022

See all articles by William Christopher Gerken

William Christopher Gerken

University of Kentucky - Finance

Morteza Momeni Shahraki

University of Kentucky - Finance

Date Written: June 29, 2022

Abstract

We study third party quality certification in the market for financial advice. Using the Barron's Top Financial Advisors rankings, we find evidence that being named a top advisor increases both assets under management and accounts for individuals and their firms. The effects increase sharply around thresholds for certification suggesting that clients value the certification itself and not solely the underlying quality. The certification effects are larger for those from smaller firms and newer advisors. Consistent with models of reputation in the financial advisory industry, after certification, advisors are less likely to engage in misconduct.

Keywords: Financial Advisors, Barron's Rankings, Third-party certification, Reputation, Financial Misconduct

Suggested Citation

Gerken, William Christopher and Momeni Shahraki, Morteza, Third Party Quality Certification in the Market for Financial Advice (June 29, 2022). Available at SSRN: https://ssrn.com/abstract=4149993 or http://dx.doi.org/10.2139/ssrn.4149993

William Christopher Gerken (Contact Author)

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

Morteza Momeni Shahraki

University of Kentucky - Finance ( email )

Lexington, KY 40506
United States

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