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Losing Trust in Money Doctors

Author

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  • Weber, Martin
  • Dorn, Daniel

Abstract

Delegated stock market participation is fragile, especially during crises. Investors who had delegated all of their equity investments to fund managers before the financial crisis were almost twice as susceptible to exiting the stock market during the crisis than their peers who invested in individual stocks, other things equal. This result holds across two very different samples: 40,000 clients at a large German bank and the 2007-2009 panel of the U.S. Survey of Consumer Finances. Households who reported to rely on the advice of money doctors before the crisis, but not afterwards, were especially likely to sell all their stock funds.

Suggested Citation

  • Weber, Martin & Dorn, Daniel, 2017. "Losing Trust in Money Doctors," CEPR Discussion Papers 11859, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11859
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    Citations

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    Cited by:

    1. Korniotis, George & Bonaparte, Yosef & Kumar, Alok, 2020. "Income Risk and Stock Market Entry/Exit Decisions," CEPR Discussion Papers 15370, C.E.P.R. Discussion Papers.
    2. Weber, Martin & Germann, Maximilian & Loos, Benjamin, 2018. "Trust and Delegated Investing: A Money Doctors Experiment," CEPR Discussion Papers 12984, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Household finance; Diversi fication; Delegated investing; Stock market participation; Financial crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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