Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



The financial advice profession provides a potentially valuable service to consumers within an increasingly complex financial marketplace. Financial advice professionals can substitute for costly investment in financial knowledge by households. This chapter provides evidence that financial advisers can improve financial outcomes when the interests of the advisor and household are aligned. Yet professional advice can harm consumers if conflicts of interest create high agency costs. Understanding how differences in compensation methods and regulatory frameworks affect incentives is essential to improving the breadth and quality of professional advice.


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


Household finance, financial planning, financial advice, agency costs, fiduciary regulation, consumer economics

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2012 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 28 June 2019