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2015 Conference

del 15 al 16 de October del 2015

Orlando, FL

Welcome to the AFS Conference 2015 Schedule App. Please use the search features to see when your session or poster has been scheduled to take place. 

Stock Diversification, Brokerage Accounts, and Financial Advice

jueves, el 15 de octubre de 2015 a las 16:00–17:30 EDT
Scotland AB
Keywords: 5 words maximum

Diversification Advice Compensation

Very short description for use in the program to help attendees understand more than a title can describe

A presumed benefit of financial advice is that it encourages household participation in the stock market, which is wealth building. Most normative economic models suggest investment in the stock market. Using data from the 2010 Survey of Consumer Finances we confirm the positive relationship among households who seek investment advice from brokers and increase participation in the stock market.  We do not see a significant relationship between stock ownership and households who sought investment advice from a financial planner.  Households may turn to financial advice to overcome the constraints on their knowledge of personal finance and make better investment decisions.  A common investment mistake cited in many studies the failure of households to adequately diversify their equity holdings.  Using the 2010 SCF we test to determine if financial advice makes households less likely to hold undiversified equity portfolios.  We find older, more educated, and financially sophisticated households are less likely to hold undiversified equity holdings.  Similarly we find that the likelihood of owning an undiversified equity portfolio declines with financial assets.  However we do not find a significant relationship between financial advice and stock portfolio diversification.

Lead & Corresponding Author

Lawrence Verzani, William Paterson University
Job Title

Assistant Professor

Additional Authors

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