{"pk":26216,"title":"Are Financial Advisors Money Doctors or Charlatans? Evidence on Trust, Advice,\nand Risk Taking in Delegated Asset Management","subtitle":null,"abstract":"We test the effects of advice and trust on risk-taking in three\nonline experiments designed to elucidate under what\nconditions financial advice may increase risk-taking,\nirrespective of advisor performance. In our study, investors\nmade 100 decisions, selecting between one of two alternatives:\nrisky or conservative. We manipulate the suggestion of an\nadvisor (risky vs. non-risky investments), the fee of the advice,\nas well as the trustworthiness of the advisor (by increasing the\ntransparency of the advice presented) to test the effect of the\nadvice on risk-taking. The results show that individuals\nasymmetrically follow the advice they received, with a bias\ntowards following more risky than conservative advice.\nMoreover, trusted advice was more persuasive irrespective of\nwhat the advisor suggested and even the fee is higher.","language":"eng","license":{"name":"","short_name":"","text":null,"url":""},"keywords":[{"word":"Advice taking; Financial advice; Money doctors;\nRisk taking; Trust"}],"section":"Papers","is_remote":true,"remote_url":"https://escholarship.org/uc/item/4tk0335v","frozenauthors":[{"first_name":"Qizhang","middle_name":"","last_name":"Sun","name_suffix":"","institution":"University of Lugano","department":""},{"first_name":"Michael","middle_name":"","last_name":"Gibbert","name_suffix":"","institution":"University of Lugano","department":""},{"first_name":"Thomas","middle_name":"T.","last_name":"Hills","name_suffix":"","institution":"University of Warwick","department":""},{"first_name":"Eric","middle_name":"","last_name":"Nowak","name_suffix":"","institution":"University of Lugano","department":""}],"date_submitted":null,"date_accepted":null,"date_published":"2016-01-01T13:00:00-05:00","render_galley":null,"galleys":[{"label":"PDF","type":"pdf","path":"https://journalpub.escholarship.org/cognitivesciencesociety/article/26216/galley/15852/download/"}]}