Financial advice: Who Exactly Follows It? |
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| Institution: | 1. University of Haifa, Israel;2. University of Haifa, and Western Galilee College, Israel;1. Department of Biomedical Sciences and Public Health, Marche Polytechnic University, Via Tronto 10/A, Torrette di Ancona 60126, Italy;2. Faculty of Philosophy, Philosophy of Science and the Study of Religion, LMU Munich, Geschwister-Scholl-Platz 1, Munich 80539, Germany;3. Faculty of Psychology and Educational Sciences, LMU Munich, Leopoldstrasse 13, Munich 80802, Germany;1. Banco de Portugal and NOVA SBE;2. Bank of Italy;1. University of Tampa, Department of Economics, and IZA Institute of Labor Economics, United States;2. University of Tampa, Department of Finance, United States |
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| Abstract: | Using data from about 290,000 household investment accounts, we provide a comprehensive analysis of the role of personal economic and demographic characteristics in determining the tendency to utilize financial advice. Our findings indicate that investors' sophistication level, captured using several proxies, is negatively correlated with the decision to follow the financial advice received. In addition, we find that individual differences such as age, gender and family status are strongly associated with the tendency to use the advice. The findings are robust under different distributions of the data. Finally, we also test how macroeconomic uncertainty affects the tendency to utilize financial advice. Our results demonstrate that higher levels of financial uncertainty are associated with less use of financial advice. |
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