Financial Advice and Trust

摘要: AbstractThis article exploits new questions in the National Financial Capability Study to examine determinants of trust financial professionals and impact on use five types advice. We find that declines with age increases willingness take investment risk. Having some literacy trust, but having too much decreases it. Controlling for exposure, cost are two most important advice-seeking behavior. Saving advice is affected increasing from 17% least trusting group 44% group. © 2012 Academy Services. All rights reserved.JEL classification: D12; D14; G20Keywords: advice; Trust; literacy; Risk tolerance; Household finance1. IntroductionTrust plays a ubiquitous role many facets life, personal relationships international trade. For advisors, establishing maintaining clients' critical. Surveys conducted by Certified Planner Board Standards (2004) State Street Global Advisors (2007) rank trustworthiness as criterion when choosing adviser. Several factors make paramount context: large sums money entrusted significant risk present, sales-based incentives can create conflicts interest, fee schedules often lack transparency. With recent crisis die Madoff scandal, investors now more acutely aware these issues. This trend captured General Social Survey (GSS) proportion people hardly any confidence banks institutions doubling 21% 2008 41% 2010. In addition, latest installment Trust Index December 201 1 shows levels have not yet recovered (Sapienza Zingales, 2012). Needless say, repairing key concern institutions.The importance has long been recognized scholars variety research areas including sociology (Luhmann, 1979), marketing (Morgan Hunt, 1994), organizational behavior (Kramer Tyler, 1996), online commerce (Gefen et al., 2003). The attention this topic finance relatively Guiso al. (2008) showing stock market participation trust. From multidisciplinary effort, several views emerged. part trait shaped experiences, personality, culture (Mayer 1995). It also context-specific influenced characteristics trustee (competence, benevolence, integrity) institutional environment. Rousseau (1998) emphasize multilevel concept, example one might his banker bank's officers.While widely acknowledged, previous studies considered because data limitations. literature largely focused demographic socio-economic factors; few analyzed additional such tolerance, positive/negative behaviors, literacy.1 release 2009 (NFCS) gives us unique opportunity fill gap literature. Specifically, dataset assesses question "I would accept what they recommend." asks respondents whether received last years categories: savings investments, tax planning, insurance, mortgage or loan, debt counseling. NFCS particularly useful it both depth breadth: boasts over 28,000 observations features wide range topics banking, credit cards, mortgages, retirement savings. …