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Non-Exclusive Financial Advice

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Abstract

We propose a simple model of non-exclusive .nancial advice in which two households rely on a self-interested (common) expert to make their investment choices. There is only one source of risk, and the expert is privately informed about the risky asset.s volatility. When monetary transfers are unenforceable, we show that investors may delegate their investment decisions to the expert. When doing so, however, they impose restrictions on her choices which crucially depend on whether the expert perceives investors.asset allocations as complements or as substitutes. Finally, we analyze the implications of non-exclusivity in .nancial advice on investment behavior and welfare, and highlight a set of novel testable implications.

Suggested Citation

  • Salvatore Piccolo & Giovanni W. Puopolo & Luis Vasconcelos, 2013. "Non-Exclusive Financial Advice," CSEF Working Papers 347, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 13 Oct 2015.
  • Handle: RePEc:sef:csefwp:347
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    More about this item

    Keywords

    Delegated Portfolio Management; Financial Advice; Non-Exclusivity;

    JEL classification:

    • 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

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