Financial Advice and Retirement Savings

72 Pages Posted: 30 Jan 2023 Last revised: 14 Nov 2024

See all articles by Daniel Hoechle

Daniel Hoechle

FHNW School of Business - Institute for Finance; University of Basel - Department of Finance

Stefan Ruenzi

University of Mannheim - Department of International Finance

Nic Schaub

WHU - Otto Beisheim School of Management

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

Date Written: July 11, 2024

Abstract

We study the impact of financial advice on retirement savings. We document that advisors help clients to prepare for retirement by inducing them to take advantage of tax incentives for retirement savings. We find no indication that adviser-induced contributions to retirement savings lead to negative side-effects, such as reductions in other savings or liquidity constraints. Increased retirement savings are also not associated with higher profits the bank generates with clients. Hence, our findings point towards a bright side of financial advice. However, advisors do not in particular target clients that are at a higher risk of undersaving for retirement.

Keywords: financial advice, retirement savings, voluntary pension contributions, tax-exempt retirement accounts

JEL Classification: D14, E21, G11, G51, J32

Suggested Citation

Hoechle, Daniel and Ruenzi, Stefan and Schaub, Nic and Schmid, Markus, Financial Advice and Retirement Savings (July 11, 2024). Available at SSRN: https://ssrn.com/abstract=4339769 or http://dx.doi.org/10.2139/ssrn.4339769

Daniel Hoechle

FHNW School of Business - Institute for Finance ( email )

Peter Merian-Strasse 86
Basel, CH-4002
Switzerland
+41 61 279 17 73 (Phone)

University of Basel - Department of Finance ( email )

Peter Merian-Weg 6
Basel, CH-4002
Switzerland

Stefan Ruenzi

University of Mannheim - Department of International Finance ( email )

L9, 1-2
Mannheim, 68131
Germany

Nic Schaub (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Unterer Graben 21
St. Gallen, 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Swiss Finance Institute

c/o University of St. Gallen
Dufourstrassse 50
St. Gallen, SG 9000
Switzerland

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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