Switching from commissions on mutual funds to flat-fees:: How are advisory clients affected?

Steffen Meyer; Charline Uhr; Benjamin Loos; Andreas Hackethal

doi:10.1016/j.jebo.2023.03.015

Switching from commissions on mutual funds to flat-fees: How are advisory clients affected?

Steffen Meyer^*, Charline Uhr, Benjamin Loos, Andreas Hackethal

^*Corresponding author af dette arbejde

Institut for Økonomi

Publikation: Bidrag til tidsskrift/Konferencebidrag i tidsskrift /Bidrag til avis › Tidsskriftartikel › Forskning › peer review

2 Citationer (Scopus)

8 Downloads (Pure)

Abstract

Using a field study at a German brokerage, we investigate advised individual investors’ behavior and outcomes after self-selecting into a flat-fee scheme (percentage of portfolio value) for mutual funds. In a difference-in-differences setting, we compare 699 switchers to propensity-score-matched advisory clients who remained in the commission-based scheme. Switchers increase their portfolio values, improve portfolio diversification, and increase their portfolio performance. They also demand more financial advice and follow more advisor recommendations. We argue that switchers attribute a higher quality to the unchanged advisory services.

Originalsprog	Engelsk
Tidsskrift	Journal of Economic Behavior & Organization
Vol/bind	209
Sider (fra-til)	423-449
Antal sider	27
ISSN	0167-2681
DOI	https://doi.org/10.1016/j.jebo.2023.03.015
Status	Udgivet - maj 2023

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10.1016/j.jebo.2023.03.015Licens: CC BY

1-s2.0-S0167268123000811-mainForlagets udgivne version, 1,67 MBLicens: CC BY

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American Finance Association Meetings: 2020
Uhr, C. (Taler) & Meyer, S. (Taler)
2 jan. 2020 → 5 jan. 2020
Aktivitet: Deltagelse i eller arrangement af en begivenhed - typer › Deltagelse i eller organisering af konference

Citationsformater

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abstract = "Using a field study at a German brokerage, we investigate advised individual investors{\textquoteright} behavior and outcomes after self-selecting into a flat-fee scheme (percentage of portfolio value) for mutual funds. In a difference-in-differences setting, we compare 699 switchers to propensity-score-matched advisory clients who remained in the commission-based scheme. Switchers increase their portfolio values, improve portfolio diversification, and increase their portfolio performance. They also demand more financial advice and follow more advisor recommendations. We argue that switchers attribute a higher quality to the unchanged advisory services. ",

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author = "Steffen Meyer and Charline Uhr and Benjamin Loos and Andreas Hackethal",

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T2 - How are advisory clients affected?

AU - Meyer, Steffen

AU - Uhr, Charline

AU - Loos, Benjamin

AU - Hackethal, Andreas

PY - 2023/5

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N2 - Using a field study at a German brokerage, we investigate advised individual investors’ behavior and outcomes after self-selecting into a flat-fee scheme (percentage of portfolio value) for mutual funds. In a difference-in-differences setting, we compare 699 switchers to propensity-score-matched advisory clients who remained in the commission-based scheme. Switchers increase their portfolio values, improve portfolio diversification, and increase their portfolio performance. They also demand more financial advice and follow more advisor recommendations. We argue that switchers attribute a higher quality to the unchanged advisory services.

AB - Using a field study at a German brokerage, we investigate advised individual investors’ behavior and outcomes after self-selecting into a flat-fee scheme (percentage of portfolio value) for mutual funds. In a difference-in-differences setting, we compare 699 switchers to propensity-score-matched advisory clients who remained in the commission-based scheme. Switchers increase their portfolio values, improve portfolio diversification, and increase their portfolio performance. They also demand more financial advice and follow more advisor recommendations. We argue that switchers attribute a higher quality to the unchanged advisory services.

KW - Consumer financial protection

KW - Financial advice

KW - Household finance

KW - Individual investor

KW - Inducements

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DO - 10.1016/j.jebo.2023.03.015

M3 - Journal article

SN - 0167-2681

VL - 209

SP - 423

EP - 449

JO - Journal of Economic Behavior & Organization

JF - Journal of Economic Behavior & Organization

ER -

Switching from commissions on mutual funds to flat-fees: How are advisory clients affected?

Abstract

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