Do financial advisors provide tangible benefits for investors? Evidence from tax-motivated mutual fund flows
AbstractWhether financial advisors provide useful services for clients that seek to invest in mutual funds remains an open question. We are the first to show that financial advisors generate tangible benefits for their clients in the form of useful tax advice. Specifically, financial advisors help clients reduce their tax liabilities by avoiding taxable fund distributions, which can potentially improve their after-tax returns. The benefits from financial advice are the largest in situations that matter most for investors, especially when investors face large and hard-to-predict tax liabilities. Evidence from December distributions suggests that financial advisors also help clients with tax-loss selling. --
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Bibliographic InfoPaper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 12-09 [rev.3].
Date of creation: 2014
Date of revision:
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Mutual funds; Taxable fund distributions; Financial advisors; After-tax returns;
Find related papers by JEL classification:
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2014-04-18 (Accounting & Auditing)
- NEP-ALL-2014-04-18 (All new papers)
- NEP-FMK-2014-04-18 (Financial Markets)
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