Wharton Pension Research Council Working Papers

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Working Paper

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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.


The published version of this Working Paper may be found in the 2013 publication: The Market for Retirement Financial Advice.


Financial advice, advisors, portfolio choice, defined-contribution plans, choice experiments

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the DOL, NIA, any agency of the federal government, the RAND Corporation, or the Wharton School or the Pension Research Council. © 2012 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


This research was supported by funds from the US Department of Labor (DOL) and the National Institute on Aging (NIA) via the RAND Roybal Center for Financial Decision Making. The authors thank Jeff Dominitz, Prakash Kannan, Arie Kapteyn, Annamaria Lusardi, Erik Meijer, and Kata Mihaly for related work and insightful discussion, Alice Beckman for research assistance, and Natalia Weil for editorial assistance.

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Economics Commons



Date Posted: 28 June 2019