The Quality of Financial Advice: What Influences Client Recommendations?

97 Pages Posted: 4 Jul 2022 Last revised: 14 Jul 2023

See all articles by Philippe d'Astous

Philippe d'Astous

HEC Montreal - Department of Finance

Irina Gemmo

HEC Montreal

Pierre-Carl Michaud

HEC Montreal

Date Written: July 2022

Abstract

In this paper, we conduct an experiment with a large sample of financial planner professionals in Canada to elicit factors which may influence client recommendations. Using repeated client vignettes, we find that recommendations are often in-line with what one would expect from economic theory. In particular, advice is sensitive in expected ways to relative costs and benefits of particular options. In some domains, we find evidence that planners are more likely to recommend products they own themselves, their spouse owns, or they are licensed to sell. In the investment domain, we also find that planners are more likely to recommend products that clients inquire about even when this type of solicitation is randomized across clients and options. Finally, we find that planners are systematically sensitive to the gender of the client even when gender is uninformative regarding which recommendation to make.

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Suggested Citation

d'Astous, Philippe F. and Gemmo, Irina and Michaud, Pierre-Carl, The Quality of Financial Advice: What Influences Client Recommendations? (July 2022). NBER Working Paper No. w30205, Available at SSRN: https://ssrn.com/abstract=4153098 or http://dx.doi.org/10.2139/ssrn.4153098

Philippe F. D'Astous (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Irina Gemmo

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Pierre-Carl Michaud

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

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