Presenter: Charline Uhr, Aarhus University

Title: When financial advice leads to positive performance: Evidence from repeated client-advisor interactions

Abstract: Does the performance of financial products investors purchased—on their own or with the help of a financial advisor—influence their future decisions? To answer this question, I use a sample of calls between 3,455 German brokerage clients and their financial advisor between 2005 and 2015. If the advisor's recommendations led to a positive performance in the past, chances of the investor following financial advice again increases by 3.4%, while the probability of completely refraining from financial advice is decreased by 10%. Positive performance increases portfolio values and causes higher risks and costs of recommended products in the future.

Organizers: Stefan Hirth and Anders Merrild Posselt