Trust and Financial Advice

Jeremy Burke, Angela A. Hung

Published May 8, 2015

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.

Topics

Document Details

Citation

Chicago Manual of Style

Burke, Jeremy and Angela A. Hung, Trust and Financial Advice. Santa Monica, CA: RAND Corporation, 2015. https://www.rand.org/pubs/working_papers/WR1075.html.
BibTeX RIS

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

This publication is part of the RAND 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.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND 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.