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Trust and financial advice

Published online by Cambridge University Press:  14 November 2019

Jeremy Burke  and
Angela A. Hung
Jeremy Burke
Affiliation:
University of Southern California, Center for Economic and Social Research, Washington, DC, USA
Angela A. Hung*
Affiliation:
RAND Corporation, Santa Monica, CA, USA
*
*Corresponding author. Email: jeremy.burke@usc.edu
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Abstract

We explore the relationships between financial trust and behaviors, attitudes, knowledge, and preferences related to utilizing professional financial advice. Using survey data from the RAND American Life Panel, we find that financial trust is correlated with advice usage and likelihood of seeking advisory services. Leveraging an experiment that randomized provision of and access to advice, we find that trust is an important predictor of who chooses to receive advice, even after controlling for demographic characteristics and financial literacy. However, providing unsolicited advice has little impact on behavior, even for individuals with high levels of trust.

Keywords

Financial advicefinancial literacyretirement savingstrustD14D91
Type
Article
Information
Journal of Pension Economics & Finance , Volume 20 , Issue 1 , January 2021 , pp. 9 - 26
Copyright
Copyright © Cambridge University Press 2019

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