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Location Decisions of Domestic and Foreign-Affiliated Financial Advisors: Australian Evidence

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  • Robert Faff
  • Tribeni Lodh
  • Jerry Pawada

Abstract

We examine two views of the location choice of newly qualified personal financial advisors that recommend fund managers to retail investors. In one, sources of investment pools are the determinants of the location choice of financial advisors (the ‘source of funds’ hypothesis). In the other, investment advisors learn from and mimic the location of competing industries (the ‘knowledge spill-over’ hypothesis). We also investigate whether ownership structures, such as institutional and foreign affiliation, affect the location choices of advisors. Overall, advisor location is determined by considerations for the profitability of an area as a source of both investment funds and potential information spillovers from competitors. Institutional affiliation may result in differences in the set of relevant location choice factors, but does not detract from our main findings. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Robert Faff & Tribeni Lodh & Jerry Pawada, 2012. "Location Decisions of Domestic and Foreign-Affiliated Financial Advisors: Australian Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 42(3), pages 207-228, December.
    • Handle: RePEc:kap:jfsres:v:42:y:2012:i:3:p:207-228
    DOI: 10.1007/s10693-011-0123-x
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    More about this item

    Keywords

    Financial advisors; Location decisions; Australia; G20; G29;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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