Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Financial Advice
Journal of Economic Literature
vol. 50,
no. 2, June 2012
(pp. 494–512)
Abstract
Financial advice could play an essential role in well-functioning markets for retail financial products, given that many consumers find it difficult to evaluate the complex products on offer. However, conflicts of interest, which are pervasive in some parts of the industry, can turn advice into a curse rather than a blessing for consumers, especially when consumers are not sufficiently wary. Through a simple model of financial advice, we overview the pros and cons of various policy interventions, such as imposing mandatory disclosure, banning commissions, and regulating contract cancellation terms. (JEL D14, D18, G21, G28)Citation
Inderst, Roman, and Marco Ottaviani. 2012. "Financial Advice." Journal of Economic Literature, 50 (2): 494–512. DOI: 10.1257/jel.50.2.494JEL Classification
- D14 Personal Finance
- D18 Consumer Protection
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation