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Inderst, Roman, and
Marco Ottaviani. 2012. "Financial Advice."
,
50(2): 494-512.
Show Article Details
DOI: 10.1257/jel.50.2.494
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)
Authors:
Inderst, Roman (Goethe U Frankfurt)
Ottaviani, Marco (Bocconi U and Northwestern U)
JEL Classifications:
D14: Personal Finance
D18: Consumer Protection
G21: Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G28: Financial Institutions and Services: Government Policy and Regulation
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