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Variations in investment advice provision: A study of financial advisors of millionaire investors

Baeckström, Y., Marsh, I. W. ORCID: 0000-0002-0483-8658 & Silvester, J. (2021). Variations in investment advice provision: A study of financial advisors of millionaire investors. Journal of Economic Behavior & Organization, 188, pp. 716-735. doi: 10.1016/j.jebo.2021.05.008


Vignette methodology is used to examine how the personal characteristics of investors and financial advisors contribute to portfolio recommendations, and the judgements that advisors make about investment knowledge and control of prospective millionaire UK clients. We find that advisors use investor characteristics to make recommendations broadly in line with economic theory and regulatory requirements. However, women are judged less knowledgeable and in control of their investments than equivalent men. They also receive portfolio recommendations with slightly lower risk profiles. Portfolio recommendations vary by advisor, with experienced advisors and those with wealthier clients recommending higher risk portfolios. Unmeasured advisor variables also impact on judgements and recommendations. These findings have relevance to the wealth management industry and regulators, in focusing attention on the conscious and unconscious influences on the judgements advisors make about their clients.

Publication Type: Article
Additional Information: © 2023. This manuscript version is made available under the CC-BY-NC-ND 4.0 license in new tab/window)
Publisher Keywords: Financial advice, Investors, Risk tolerance, Vignette, Financial advisors, Gender
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
SWORD Depositor:
[thumbnail of JEBO_2021 FINAL BEFORE ACCEPTANCE (2).pdf]
Text - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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