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PreprintCited by 52Financial Markets and Investment StrategiesFinancial Literacy, Pension, Retirement AnalysisCorporate Finance and Governance

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The Influence of Financial Advisors on Household Portfolios: A Study on Private Investors Switching to Financial Advice

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Gerhardt, Ralf, Hackethal, Andreas·2009·SSRN Electronic Journal
DOI 10.2139/ssrn.1343607
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Abstract

Investment advisors have significant influence on private investors' financial decisions but empirical studies of their behavior are rare. Based on a large and unique data set of the detailed portfolio compositions and daily transactions of more than 65,000 customers of a large German direct bank, we first compare advised investors with groups of non-advised investors, including matched peers. We find that the effect of investment advice is probably less than assumed. To underline this finding, we conduct an event study comparing 597 investors before and after the decision to take regular investment advice. We find much higher trading activity after the event due to advisors re-structuring clients' portfolios, less risky and speculative trading and rising diversification.

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  • Professionally-managed portfolios are better diversified than portfolios of self-directed retail investors.

    “It could be shown that professionally-managed portfolios are better diversified (Bluethgen et al. 2008;Gerhardt and Hackethal 2009) and exhibit weaker disposition effects (Shapira and Venezia 2001) than portfolios of self-directed retail investors.”

    From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Gerhardt and Hackethal 2009

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References 29 · Cited by 52

Research works printed but not linked: 26

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Metadata

Authors
Gerhardt, R., & Hackethal, A.
Affiliations
Goethe University Frankfurt (DE)
Corresponding author
Gerhardt, Ralf
ORCID
Hackethal, Andreas
Venue
SSRN Electronic Journal
Publisher
Elsevier BV
Published
2009
ISSN
1556-5068 (ISSN-L)
DOI
10.2139/ssrn.1343607
OpenAlex
W2103046696
Cited by
52
References
29
Citations by year
2026: 1 · 2025: 2 · 2024: 5 · 2023: 7 · 2022: 3 · 2021: 1 · 2020: 3 · 2019: 6 · 2018: 2 · 2017: 3 · 2016: 3 · 2015: 3 · 2014: 3 · 2013: 4 · 2012: 3
Type
posted content
Language
en
Open access
Locations
SSRN Electronic Journal (acceptedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Literacy, Pension, Retirement Analysis
  • Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
Keywords
financial advisors, investment advice, household portfolios, retail investors, portfolio restructuring, trading, risk-taking, diversification, direct banking

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