Non-Exclusive Financial Advice

Theory Matters for Financial Advice!

We show that the optimal asset allocation for an investor depends crucially on the theory with which the investor is modeled. For the same market data and the same client data different theories lead to different portfolios. The market data we consider is standard asset allocation data. The client data is determined by a standard risk profiling question and the theories we apply are mean–varian...

Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making under Risk

BACKGROUND Financial advice from experts is commonly sought during times of uncertainty. While the field of neuroeconomics has made considerable progress in understanding the neurobiological basis of risky decision-making, the neural mechanisms through which external information, such as advice, is integrated during decision-making are poorly understood. In the current experiment, we investigat...

Intermediation and Exclusive Representation in Financial Networks

This paper develops a theory of financial intermediation. Consider an environment with repeated financial interactions in which strategic default is possible. We show that if interactions between any lender and borrower are infrequent and if market participants have incomplete knowledge of the patterns of interactions in the market, then all investments must be intermediated. Moreover, each int...

Financial Advice: An Improvement for Worse?

Using data from a large German commercial bank, this paper focuses on three key issues in order to analyze the extent of financial advice in individual portfolios. First, we investigate whether collaboration with financial advisors attains to better performing portfolios. Second, we examine the effects of financial advisors on household investment mistakes. Third, we analyze whether accounts ru...

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