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Don't move my cheese: Financial advice adaptation to regulatory change

Author

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  • Abudy, Menachem (Meni)
  • Gildin, Ilan
  • Mugerman, Yevgeny

Abstract

This paper examines the impact of financial advisors on retail investor behavior in response to an Israeli regulation converting ETNs to ETFs. Our findings demonstrate that transactions influenced by financial advisors shifted from ETNs to index funds following the reform, while unadvised market participants’ tendencies did not change. This shift is attributed to the reform's cancellation of matched transactions, which changed the work routine for financial advisors. The results demonstrate that to be effectively implemented, financial reforms should consider their effect on market participants’ workflows.

Suggested Citation

  • Abudy, Menachem (Meni) & Gildin, Ilan & Mugerman, Yevgeny, 2024. "Don't move my cheese: Financial advice adaptation to regulatory change," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000357
    DOI: 10.1016/j.frl.2024.105005
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    References listed on IDEAS

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    1. John Y. Campbell, 2016. "Restoring Rational Choice: The Challenge of Consumer Financial Regulation," American Economic Review, American Economic Association, vol. 106(5), pages 1-30, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Regulation; Financial advisors; Retail investors; Investor behavior; Financial reform;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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