Working Paper: NBER ID: w30205
Authors: Philippe Dastous; Irina Gemmo; Pierre-Carl Michaud
Abstract: In this paper, we conduct an experiment with a large sample of financial planner professionals in Canada to elicit factors which may influence client recommendations. Using repeated client vignettes, we find that recommendations are often in-line with what one would expect from economic theory. In particular, advice is sensitive in expected ways to relative costs and benefits of particular options. In some domains, we find evidence that planners are more likely to recommend products they own themselves, their spouse owns, or they are licensed to sell. In the investment domain, we also find that planners are more likely to recommend products that clients inquire about even when this type of solicitation is randomized across clients and options. Finally, we find that planners are systematically sensitive to the gender of the client even when gender is uninformative regarding which recommendation to make.
Keywords: financial advice; client recommendations; financial planners; biases; experiment
JEL Codes: G51; G52; G53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| planner characteristics (P11) | recommendations (Y50) |
| familiarity bias (G41) | recommendations (Y50) |
| planner's ownership status (R21) | recommendations (Y50) |
| client involvement (O36) | recommendations (Y50) |
| gender of the client (J16) | recommendations (Y50) |
| economic theory (D46) | recommendations (Y50) |