Financial Advice and Retirement Savings
72 Pages Posted: 30 Jan 2023 Last revised: 14 Nov 2024
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
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