What is the Impact of Financial Advisors on Retirement Portfolio Choices and Outcomes?
AbstractWithin the Oregon University System's defined contribution retirement plan, one investment provider offers access to face-to-face financial advice through its network of brokers. We find that younger, less highly educated, and less highly paid employees are more likely to choose this provider. To benchmark the portfolios of broker clients, we use the actual portfolios of self-directed investors and counterfactual portfolios constructed using target-date funds, a popular default investment. Broker clients allocate contributions across a larger number of investments than self-directed investors, and they are less likely to remain fully invested in the default option. However, broker clients' portfolios are significantly riskier than self-directed investors' portfolios, and they underperform both benchmarks. Exploiting across-fund variation in broker compensation, we find that broker clients' allocations are higher when broker fees are higher. Survey responses from current plan participants support our identifying assumption that the portfolio choices of broker clients reflect the recommendations of their brokers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18158.
Date of creation: Jun 2012
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- D14 - Microeconomics - - Household Behavior - - - Personal Finance
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2012.
464, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Nicola Gennaioli & Andrei Shleifer & Robert W. Vishny, 2012. "Money Doctors," NBER Working Papers 18174, National Bureau of Economic Research, Inc.
- Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2012. "Money doctors," Economics Working Papers 1355, Department of Economics and Business, Universitat Pompeu Fabra.
- Cici, Gjergji & Kempf, Alexander & Sorhage, Christoph, 2013. "Are financial advisors useful? Evidence from tax-motivated mutual fund flows," CFR Working Papers 12-09 [rev.], University of Cologne, Centre for Financial Research (CFR).
- Cici, Gjergji & Kempf, Alexander & Sorhage, Christoph, 2012. "Are financial advisors useful? Evidence from tax-motivated mutual fund flows," CFR Working Papers 12-09, University of Cologne, Centre for Financial Research (CFR).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.