Competition across money managers, along with market entry, in theory could ensure that capital market remains competitive. But in Chile, which has had a privatized pension system for 25 years, high rates of switching between the funds and little downward movement on fees, have been interpreted as evidence of market inefficiency. This chapter uses a change in the regulatory rules governing the marketing of AFP pensions (Administradoras de Fondos de Pensiones) in Chile to investigate the empirical basis for sources of market frictions. We find that switching patterns are on a par with trading in US 401(k) accounts, and further, that switchers tend to be highly educated and relatively more highly paid. Switching is also more common among those with higher levels of financial literacy. The 1997 regulatory change appears to have reduced switching, particularly among the better educated.