Search results

1 – 10 of over 30000
To view the access options for this content please click here
Article
Publication date: 1 September 2004

Patrick John Ring

The Financial Services Authority (FSA) is about to implement wholesale reforms of the regulatory structure of advice in the retail financial services sector. Instead of…

Abstract

The Financial Services Authority (FSA) is about to implement wholesale reforms of the regulatory structure of advice in the retail financial services sector. Instead of having to choose between a “tied adviser” or an “independent financial adviser” (IFA) under a “polarised” regime, consumers will have a much wider choice in terms of the range of products and scope of advice available under the new “depolarised” structure. In undertaking these reforms, the FSA aims “to improve consumer outcomes” by dealing with what it argues are market failures in the retail financial services market. This paper assesses whether the FSA’s final blueprint for financial advice can provide the improved consumer outcomes the FSA intends. It critically examines the issues of choice and quality for both products and advice, as well as considering the extent to which the reforms will create the kind of “empowered” consumers the FSA appears to expect. It argues that the reforms may not appreciably address the market failures the FSA sets out to remedy, and suggests that this is due to the likely inability of consumers to understand and take advantage of the new marketplace that is being created. This paper suggests that much greater emphasis should have been placed on financial education and extending the availability of advice before attempting such radical reforms.

Details

Journal of Financial Regulation and Compliance, vol. 12 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 5 April 2013

Inga‐Lill Söderberg

This paper aims to investigate the relationships between advisor characteristics and consumer risk perception, willingness to follow advice and perception of advisor…

Abstract

Purpose

This paper aims to investigate the relationships between advisor characteristics and consumer risk perception, willingness to follow advice and perception of advisor credibility in a financial services context. It answers calls for more knowledge about financial advisors’ influence on financial decision‐making among consumers.

Design/methodology/approach

An experimental study, displaying financial advice together with photographs of advisors, was completed by convenience sampling of 200 Swedish consumers and analysis using statistical techniques to compare groups: two‐way between‐groups ANOVA.

Findings

This study shows that advisor gender affected consumer risk perceptions, willingness to follow advice and perception of advisor credibility in a financial services context, whereas advisor mood affected only consumer willingness to follow advice. No biases depending on buyer–seller similarity were found.

Research limitations/implications

The study focuses on consumer perceptions – not real‐life investment choices. Conclusions are drawn from a relatively small sample. However, the policy implications are important, suggesting that characteristics other than those of consumers (e.g. gender, educational level, occupation, financial literacy) can be of relevance for policymakers in their attempts to improve consumer protection.

Practical implications

The findings provide useful insights for marketing practitioners that could help adjust information disseminated to consumer segments and that could have implications for marketing and hiring practices in the financial sector.

Originality/value

This paper illustrates the role of advisor characteristics in consumer financial decision‐making and calls for more research on financial advisory services.

Details

International Journal of Bank Marketing, vol. 31 no. 3
Type: Research Article
ISSN: 0265-2323

Keywords

To view the access options for this content please click here
Article
Publication date: 10 November 2014

Annie Claire Zhang

– The purpose of this paper is to explore the differences in KiwiSaver portfolio composition between investors who receive financial advice and those who do not.

Abstract

Purpose

The purpose of this paper is to explore the differences in KiwiSaver portfolio composition between investors who receive financial advice and those who do not.

Design/methodology/approach

Using proprietary data which contain information of 405,107 individual KiwiSaver accounts, this paper examines who receives advice, compares the asset allocations of advised accounts with non-advised accounts, explores the relation of asset allocation with demographic characteristics and compares differences in returns between advised and non-advised investors.

Findings

Three key findings are presented in this paper. First, female investors, relatively older investors and investors with higher levels of funds under management (invested wealth) are more likely to receive financial advice. Second, advised investors hold more equity assets. Third, differences in performance between advised and non-advised accounts are marginal.

Research limitations/implications

Panel data are not used, which prohibit investigating asset allocation choices overtime. The time series for returns is short, as KiwiSaver has only been operating since 2007. The total portfolio that people own is not known; thus, the values on investment fund information do not represent the total wealth of each person, as other accounts elsewhere may exist.

Practical implications

There are broad implications for the New Zealand capital market, retirement policy, financial advice industry and development of financial literacy programmes.

Originality/value

The paper examines individual investor behaviour on a nationwide sample and explores how receiving financial advice relates to asset allocation.

Details

Pacific Accounting Review, vol. 26 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

To view the access options for this content please click here
Article
Publication date: 9 May 2016

Patrick Ring

The purpose of this paper is to review the effect of reforms to the UK’s retail advice sector as a result of the Retail Distribution Review (RDR).

Abstract

Purpose

The purpose of this paper is to review the effect of reforms to the UK’s retail advice sector as a result of the Retail Distribution Review (RDR).

Design/methodology/approach

The paper takes the form of a review of the RDR in the context of the Financial Advice Market Review (FAMR).

Findings

There is a lack of clarity, experienced by both consumers and financial advisers, concerning the nature of “advice”. This results from the use of an array of regulatory and non-regulatory terms. Whilst enhancing professionalisation and reducing commission bias, the RDR is failing to address the needs of many financial consumers – identified by many as an “advice gap”. It is argued that the focus of the RDR, and previous reforms, on addressing market failures may be misplaced.

Practical implications

The paper provides an analysis designed to help in the process of developing a retail advice sector that meets the needs of consumers, in the context policy reforms placing more emphasis on the responsibilities of individuals for financial planning.

Social implications

The study has the potential of better outcomes for consumers and reputational returns for the financial services sector.

Originality/value

This paper is a review of the current regulatory issues facing financial advisers and retail consumers in the context of the RDR and FAMR.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Book part
Publication date: 9 July 2018

Patrick Ring

In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many…

Abstract

In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many countries face an array of potentially difficult financial choices and decisions. Limitations in levels of knowledge and expertise may lead them to consider seeking financial advice. Yet, in the wake of the great financial crisis, trust in the financial services industry is low.

At the same time, in a number of countries the financial advice sector is facing its own challenges. These include regulatory issues concerning the definition, suitability and delivery of advice; the affordability of advice; and the challenges and opportunities facing the advice sector as a result of the increasing use of technology in the financial services sector.

This chapter examines the implications of these developments for the regulation and governance of financial advice in the context of Markets in Financial Instruments Directive II. In particular, it considers the example of the UK and issues this raises for the implementation of recent European regulatory reforms.

Details

Governance and Regulations’ Contemporary Issues
Type: Book
ISBN: 978-1-78743-815-6

Keywords

To view the access options for this content please click here
Article
Publication date: 1 May 1992

Christine T. Ennew

Consumer protection was an important motivating factor behind theintroduction of polarization in the Financial Services Act. Despite thepotential benefits to the consumer…

Abstract

Consumer protection was an important motivating factor behind the introduction of polarization in the Financial Services Act. Despite the potential benefits to the consumer of using independent financial advice as a source of information and a medium for the purchase of financial services, the majority of consumers appear to attach little value to the status of a financial adviser per se and instead attach importance to the image and reputation of particular suppliers. Reports a survey by in‐depth interviews of 140 consumers in the East Midlands, UK, that confirms the relatively low level of interest in independent financial advice, with the groups most likely to use such advisers being identified as the younger consumers from higher social class groupings who do not regularly collect product information from alternative sources such as newspapers and television.

Details

International Journal of Bank Marketing, vol. 10 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

To view the access options for this content please click here
Article
Publication date: 1 April 2000

Patrick Ring

For the first time, a UK financial services regulator will have a statutory duty to enhance financial education in the UK. The Financial Services Authority is now…

Abstract

For the first time, a UK financial services regulator will have a statutory duty to enhance financial education in the UK. The Financial Services Authority is now beginning to set out in some detail how it will go about fulfilling that duty, and the issues it faces. As well as increasing consumer awareness of the financial industry and improving consumers' ability to identify their financial needs, the FSA aims to enable consumers to decide upon the purchase of financial products through the provision of the FSA's own information and advice — what may be referred to as a form of ‘solution education’. This will place the FSA in a relationship with the general public where the rights, responsibilities and expectations of, and upon, consumers must be made clear and accepted. The inability of the current regulatory regime to establish unequivocally what constitutes adequate or appropriate advice does not augur well.

Details

Journal of Financial Regulation and Compliance, vol. 8 no. 4
Type: Research Article
ISSN: 1358-1988

To view the access options for this content please click here
Article
Publication date: 18 June 2018

Muhammad Zubair Tauni, Muhammad Ansar Majeed, Sultan Sikandar Mirza, Salman Yousaf and Khalil Jebran

The purpose of this paper is to investigate the role of financial advice on investor trading behavior by analyzing the influence of advisor personality.

Abstract

Purpose

The purpose of this paper is to investigate the role of financial advice on investor trading behavior by analyzing the influence of advisor personality.

Design/methodology/approach

The study utilized the Big Five personality framework from Costa and McCrae (1992) to measure personality traits of advisors and examined the data collected from 314 stock investor–advisor dyads. Personality traits of advisors were measured by the NEO-Five Factor Inventory (Costa and McCrae, 1989). Confirmatory factor analysis was conducted to assess the fitness of the Big Five model. We followed two-stage least square method for estimating endogenous covariate by employing instrumental variable analysis. Probit model was used to evaluate the moderating influence of advisor personality traits on the association between the usage of financial advice and trading behavior.

Findings

The authors found that financial advice positively impacts investors’ stock trading frequency. The authors also provide empirical evidence that financial advice is more likely to increase trading frequency when advisor personality tends to be openness, conscientiousness and agreeableness. On the other hand, information acquired from financial advisors causes fewer adjustments in investors’ portfolios when the personality of advisors is likely to be extraverted and neurotic.

Research limitations/implications

The theoretical model in our study seeks to explain that a psychological factor, namely, advisor personality, influences the way an investor interprets information signals from financial advice, which, in turn, influences the investor’s decision to trade in securities.

Practical implications

This research suggests that characteristics of advisors other than those of investors can be of relevance for policy makers in their attempts to improve their business in the financial services industry.

Originality/value

Survey-based studies in finance are lacking. This study adds to the existing literature of behavioral finance that accounts for the observed variations in investors’ financial decision making explained by psychological factors. No previous study has been conducted so far exploring variations in the impact of financial advice on investors’ stock trading behavior by the Big Five advisor personality, and this paper strives to fill this research gap in Chinese stock market.

Details

International Journal of Bank Marketing, vol. 36 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

To view the access options for this content please click here
Book part
Publication date: 19 June 2019

Antonietta Bonello

Abstract

Details

Understanding the Investor: A Maltese Study of Risk and Behavior in Financial Investment Decisions
Type: Book
ISBN: 978-1-78973-705-9

To view the access options for this content please click here
Article
Publication date: 13 March 2017

Mandeep Kaur and Tina Vohra

The paper aims to attempt to identify the attributes that women look for in their financial advisor and to examine if the choice of attributes of a financial advisor among…

Abstract

Purpose

The paper aims to attempt to identify the attributes that women look for in their financial advisor and to examine if the choice of attributes of a financial advisor among women investors in Punjab is the same across demographics. The understanding of the attributes that women want in their financial advisor will help the financial advisors to be mindful of the opportunities and the challenges they have to face while working with women investors. Studying the impact of demographics on the choice of the investment advisor would enable the service providers to provide women with services relevant to their unique and individual situations.

Design/methodology/approach

A pre-tested, well-structured questionnaire was constructed and administered personally, and the responses of 200 women investors were analyzed. The sum of the ranks assigned by women to various attributes determining the choice of a financial advisor was used to find out the most preferred attribute on the basis of which women choose their financial advisor. The Kruskal Wallis test was used to analyze the impact of demographics on the choice of the respondents.

Findings

The results of the study brought out that the friendliness of the financial advisor, and the quality of advice provided by them are preferred attributes determining the choice of a financial advisor. Along with this, the results also state that the preference for the attribute friendliness and quality of advice is not the same across age groups. The choice of attributes also varies according to the marital status of the respondents.

Practical implications

The current study will contribute toward a greater understanding of the attributes which are considered important by women while choosing their financial advisor. The study will help the financial advisors to cater to the needs of their women clients. Moreover, the study will also benefit women by bringing about a positive change in the attitude of the financial advisors in favor of them. The greater sensitization of the financial advisors toward their women clients would lead to greater stock market participation among women, thereby benefitting the society.

Originality/value

The paper is an attempt to identify the attributes that women look for in their financial advisor and to examine if the choice of attributes of a financial advisor among women investors in Punjab is the same across demographics or not. Therefore, the study contributes to the understanding of the investment behavior of women.

Details

International Journal of Law and Management, vol. 59 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

1 – 10 of over 30000