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The Market for Retirement Financial Advice$
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Olivia S. Mitchell and Kent Smetters

Print publication date: 2013

Print ISBN-13: 9780199683772

Published to Oxford Scholarship Online: January 2014

DOI: 10.1093/acprof:oso/9780199683772.001.0001

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Asking for Help: Survey and Experimental Evidence on Financial Advice and Behavior Change

Asking for Help: Survey and Experimental Evidence on Financial Advice and Behavior Change

Chapter:
(p.182) Chapter 9 Asking for Help: Survey and Experimental Evidence on Financial Advice and Behavior Change
Source:
The Market for Retirement Financial Advice
Author(s):

Angela A. Hung

Joanne K. Yoong

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199683772.003.0009

When do individuals actually improve their financial behavior in response to advice? Using survey data from current defined contribution (DC) plan holders in the RAND American Life Panel (ALP), we find little correlation between normatively desirable behaviors and advice. Results from a hypothetical portfolio-allocation choice experiment using the ALP show that unsolicited advice has no causal effect on investment behavior, yet individuals who actively solicit advice ultimately improve performance, despite negative selection on financial ability. While expanding access to advice can have positive effects (particularly for the less financially literate), more extensive compulsory programs of financial counseling may be less effective.

Keywords:   financial advice, advisors, portfolio choice, defined contribution plans, choice experiments, American Life Panel

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