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Trust and financial advice

Author

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  • Burke, Jeremy
  • Hung, Angela A.

Abstract

We explore the relationships between financial trust and behaviors, attitudes, knowledge, and preferences related to utilizing professional financial advice. Using survey data from the RAND American Life Panel, we find that financial trust is correlated with advice usage and likelihood of seeking advisory services. Leveraging an experiment that randomized provision of and access to advice, we find that trust is an important predictor of who chooses to receive advice, even after controlling for demographic characteristics and financial literacy. However, providing unsolicited advice has little impact on behavior, even for individuals with high levels of trust.

Suggested Citation

  • Burke, Jeremy & Hung, Angela A., 2021. "Trust and financial advice," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(1), pages 9-26, January.
    • Handle: RePEc:cup:jpenef:v:20:y:2021:i:1:p:9-26_2
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    Cited by:

    1. López, Fernando & Rosas, Guillermo, 2022. "COVID-19 and attitudes towards early withdrawal of pension funds: The role of trust and political ideology," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    2. Alison Preston & Robert E. Wright, 2023. "Gender, Financial Literacy and Pension Savings," The Economic Record, The Economic Society of Australia, vol. 99(324), pages 58-83, March.
    3. Ziying Yang & Jie Gao & Du Yu, 2024. "Cognition ability, financial advice seeking, and investment performance: New evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 24(1), pages 53-82, March.

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