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Portfolio choice and financial advice

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  • Alexis Direr
  • Michael Visser

Abstract

This paper analyzes portfolio allocation decisions of individual investors. Our dataset records how individuals allocate their money among risky funds and a money-market fund, and also the characteristics of both the investors and the financial advisors who sell the products. These data offer a unique opportunity to investigate how portfolio decisions are affected by financial advisors. Our empirical strategy consists in studying the relationship between the share of the total capital invested in risky funds and the characteristics of buyers and sellers. Since the dependent variable is bounded between zero and one, we estimate a fractional response model. We find that the share invested in risky funds is larger when the advisor is more educated. Furthermore, male advisors sell larger shares of risky funds than female advisors. We offer possible explanations for these findings

Suggested Citation

  • Alexis Direr & Michael Visser, 2013. "Portfolio choice and financial advice," Finance, Presses universitaires de Grenoble, vol. 34(2), pages 35-64.
    • Handle: RePEc:cai:finpug:fina_342_0035
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    Cited by:

    1. Štěpán Jurajda & Radek Janhuba, 2018. "Gender in banking and mortgage behavior," Applied Economics Letters, Taylor & Francis Journals, vol. 25(20), pages 1432-1435, November.
    2. Alexis Direr & Eric Yayi, 2014. "Les choix de portefeuille des épargnants sur le cycle boursier et le cycle de vie," Économie et Statistique, Programme National Persée, vol. 472(1), pages 125-152.
    3. M. Debbich, 2015. "Why Financial Advice Cannot Substitute for Financial Literacy?," Working papers 534, Banque de France.
    4. Chul Choi, 2024. "The Microstructure of Mis-Selling: Financial Investment Markets and Regulation in Korea," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 13, January.

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