Retail investors and financial advisors: New evidence on trust and advice taking heuristics

Monti, Marco; Pelligra, Vittorio; Martignon, Laura; Berg, Nathan

doi:10.1016/j.jbusres.2014.02.022

Cited by 49 publications

(39 citation statements)

References 13 publications

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“…Being part of a cooperative implies sharing a common view of the world and of the purpose of financial institutions: for instance, cooperative banks do not normally distribute dividends, but provide extra benefits in terms of banking conditions. The mutualistic nature of cooperative bank and the fact that it is openly shared with the clientele, which is actually part of the bank itself, helps creating a trusting environment, as also mentioned by (Monti et al 2014). This suggests that the Relationship process is bound to play an important part in fostering continued trust, as it is a reminder that shared views and goals continue to exist.…”

Section: Estimation Outcomesmentioning

confidence: 95%

“…This bank has very peculiar characteristics 3 , for example the mutualistic nature, which has been investigated also in the literature. (Monti et al 2014), for example, study a group of Italian cooperative banks and find that this characteristic affects positively the level of trust. They claim that it contributes to create an institutional structure that aligns the advisor's interests with the investor's ones and so the latter trust more the former.…”

Section: Description Of Recipients and Submission Periodsmentioning

confidence: 99%

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Why Do You Trust Me? A Structural Equation Model of Trustworthiness in Financial Advisory

2018

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Section: Estimation Outcomesmentioning

confidence: 95%

Section: Description Of Recipients and Submission Periodsmentioning

confidence: 99%

Why Do You Trust Me? A Structural Equation Model of Trustworthiness in Financial Advisory

2018

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“…By contrast, when portfolio choices are more likely to be perceived as weak substitutes investors should trust more the expert and be more keen to delegate relative to the exclusivity benchmark. Evidence pointing in this direction is found in Monti et al (2014) who investigate factors that in ‡uence trust and advice, …nding empirical evidence supporting the idea that people tend to trust more advisors that they perceive as being relatively less biased. Second, the model predicts that depending on whether portfolio choices are perceived as strong substitutes or weak substitutes/complements, the optimal investment strategy requires a ‡oor or a cap on the amount of wealth invested into the risky asset, respectively.…”

Section: Discussionmentioning

confidence: 85%

Non-Exclusive Financial Advice

2015

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We propose a simple model of non-exclusive …nancial advice in which two households rely on a self-interested (common) expert to make their investment choices. There is only one source of risk, and the expert is privately informed about the risky asset's volatility. When monetary transfers are unenforceable, we show that investors may delegate their investment decisions to the expert. When doing so, however, they impose restrictions on her choices which crucially depend on whether the expert perceives investors'asset allocations as complements or as substitutes. Finally, we analyze the implications of non-exclusivity in …nancial advice on investment behavior and welfare, and highlight a set of novel testable implications.

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“…Or, in the words of a former banker: "No matter what rules you put in place, they'll always find ways around them." (Luyendijk 2015, p. 61 Studies regarding trust in the relationship between investors and financial advisors have only been examined to a limited degree as well, according to, e.g., Monti et al (2014Monti et al ( , p. 1749. 62 Of the five determinants of Pirson and Malhotra (2008), Van Raaij used four which he expanded to seven and applied to the financial sector (Van Esterik-Plasmeijer and Van Raaij 2012;Van Raaij 2009, p. 19).…”

Section: Limited Effectivenessmentioning

confidence: 99%

“…This is underlined by several studies that show that trust is also determined by subjective factors. For instance, there are indications that having face-to-face contact with an advisor and the circumstances under which an investment decision is made have a greater effect on investors than the characteristics of the investment product in question (Monti et al 2014(Monti et al , p. 1751. 81 This is confirmed by a study by Monti et al (2014Monti et al ( , p. 1749, which concludes that communication and relational aspects are probably the most important factors determining the degree of trust a consumer is willing to put in an advisor.…”

Section: Perverse Incentives As a Constant Factor In The Existing Andmentioning

confidence: 99%

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

Jager

2016

J Consum Policy

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The decrease in consumer trust in the financial sector and the attempts to restore it are receiving a great deal of interest, especially since the financial crisis at the end of 2008. EU legislation is one of the ways that attempts have been made to regain the trust of investors. In the second section, the concept of "trust" will be subjected to an in-depth yet not exhaustive examination, with the aim of reducing its elusiveness. The third section will discuss three recent EU proposals. Examination of these legislative proposals reveals that (1) the term "trust" is not precisely defined, and (2) without stating further reasons, the restoration of trust in the financial sector is considered a worthy goal. In light of the aforementioned, the fourth section will address the desirability of clarity regarding the term "trust." The fifth section will then assess whether legislation is a suitable means to restore consumer trust, and the sixth section explores whether the restoration of consumer trust in the financial sector is a worthy goal. Indeed, the European legislator and other policymakers seem to consider a low level of consumer trust a bad thing, a high level of consumer trust a good thing, and a higher level of consumer trust an even better thing. This article will argue that it is doubtful whether EU legislation is a suitable means for restoring consumer trust in the financial sector and, moreover, that considering the perverse incentives in the current financial sector, among other things, a realistic degree of trust, implying a certain distrust, appears preferable.Keywords Trust . Financial markets . Financial sector . Consumer protection . Financial crisis . European legislation J Consum Policy (2017) 40:25-49 DOI 10.1007 This article is partly based on an article published in the Dutch journal THEMIS (De Jager, C.E. (2015). De financiële sector: weg (van) vertrouwen of op weg naar vertrouwen? Over het nastreven van consumentenvertrouwen in de financiële sector door middel van EU wetgeving na de financiële crisis. Rechtsgeleerd Magazijn Themis, 6,[244][245][246][247][248][249][250][251][252][253][254][255][256][257].

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Retail investors and financial advisors: New evidence on trust and advice taking heuristics

Cited by 49 publications

References 13 publications

Why Do You Trust Me? A Structural Equation Model of Trustworthiness in Financial Advisory

Why Do You Trust Me? A Structural Equation Model of Trustworthiness in Financial Advisory

Non-Exclusive Financial Advice

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

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