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When Financial Advice Leads to Positive Performance: Evidence from Repeated Client–Advisor Interactions

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  • Charline Uhr

Abstract

Does the performance of advisors’ recommendations influence investors’ propensity to seek advice again? I investigate a sample of calls between 10,063 German brokerage clients and financial advisors from 2005–2015. If advisors’ recommendations in the initial meeting led to positive (vs. negative) performance, investors are 2.1 times more likely to arrange a second meeting. This effect is driven by the performance of the recommendations the investor decided to follow. Investors with positive performance follow recommendations to a greater degree. The findings show that experiences matter in the advisory context and shape the demand for advice.

Suggested Citation

  • Charline Uhr, 2025. "When Financial Advice Leads to Positive Performance: Evidence from Repeated Client–Advisor Interactions," The Review of Financial Studies, Society for Financial Studies, vol. 38(11), pages 3245-3283.
    • Handle: RePEc:oup:rfinst:v:38:y:2025:i:11:p:3245-3283.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhaf056
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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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