Download eBook for Free

FormatFile SizeNotes
PDF file 0.8 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Trust plays an important role in financial decision-making, particularly regarding financial advice. In fact, investors cite "trust" as the most important determinant in seeking a financial service professional for advice (Hung et al., 2010). In this paper, we explore the relationships between financial trust and behaviors, attitudes, knowledge and preferences related to utilizing professional financial advice. Using survey and experiment data from the RAND-USC American Life Panel, we find that financial trust is correlated with advice usage and likelihood of seeking advisory services. Analysis of the experiment shows 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.

This paper series made possible by the RAND Center for the Study of Aging and the RAND Population Research Center.

This report is part of the RAND Corporation working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.