Financial Advice and Retirement Savings

70 Pages Posted: 30 Jan 2023 Last revised: 18 Apr 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: April 16, 2024

Abstract

We study the impact of financial advice on voluntary pension contributions. We document that advisors help clients to take advantage of tax-exempt retirement accounts and induce them to invest in equities for retirement. We find no indication that the increase in retirement account usage leads to negative side-effects, such as liquidity constraints. 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. Moreover, our results suggest that advisors’ promotion of retirement accounts is associated with increased bank profits from cross-selling activities.

Keywords: financial advice, voluntary pension contributions, tax-exempt retirement accounts, stock market participation

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 (April 16, 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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