Chapter 16: Financial Advisory Services

Financial Behavior: Players, Services, Products, and Markets. H. Kent Baker, Greg Filbeck, and Victor Ricciardi, editors, 285-301, New York, NY: Oxford University Press, 2017.

Posted: 9 Jun 2017 Last revised: 20 Jul 2017

See all articles by Jeroen Nieboer

Jeroen Nieboer

London School of Economics & Political Science (LSE) - London School of Economics; Financial Conduct Authority

Paul Dolan

London School of Economics & Political Science (LSE)

Ivo Vlaev

Imperial College London

Date Written: June 1, 2017

Abstract

Evidence from the behavioral sciences, notably economics and psychology, has profoundly changed the way policymakers and practitioners present expert advice to consumers. This chapter examines the behavioral science evidence on financial advice and explores its implications for the financial advisory profession. It explains how consumers of retail financial advice respond to certain aspects of the advice in predictable ways, sometimes exhibiting behavioral biases or following certain conventions in their decision making. By recognizing and anticipating these responses, financial advisors can offer a more complete service, offering benefits beyond the strictly financial return. But the behavioral needs of consumers may also provide advisors with incentives that are not strictly aligned with their clients’ financial interests. Finally, the increasing role of technology will play an important role in shaping the financial advisory services of the future.

Keywords: behavioral finance, behavioural finance, financial advice, behavioral science, bias, decision making

JEL Classification: A12, D81, G00, G30, G10, M00, M10, M41

Suggested Citation

Nieboer, Jeroen and Dolan, Paul and Vlaev, Ivo, Chapter 16: Financial Advisory Services (June 1, 2017). Financial Behavior: Players, Services, Products, and Markets. H. Kent Baker, Greg Filbeck, and Victor Ricciardi, editors, 285-301, New York, NY: Oxford University Press, 2017., Available at SSRN: https://ssrn.com/abstract=2982384

Jeroen Nieboer

London School of Economics & Political Science (LSE) - London School of Economics ( email )

United Kingdom

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

Paul Dolan

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Ivo Vlaev (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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