Julie R. Agnew, Hazel Bateman, Christine Eckert, Fedor Iskhakov, Jordan Louviere and Susan Thorp
Abstract: We explore how individuals assess the quality of financial advice they are given and how they form judgments about the trustworthiness and expertise of their advisers. Using an incentivized discrete choice experiment, we demonstrate how clients’ opinions of adviser quality can be manipulated over time by using a simple and easily replicated confirmation strategy. Our results show how clients use external signals, such as professional credentials, to guide their choices when the quality of advice is unclear. Our results indicate that improvements to regulation and monitoring of financial adviser qualifications are warranted.