Switching from commissions on mutual funds to flat-fees: How are advisory clients affected?
Year: 2023
Type: article
Study design: Observational Study
Abstract: Using a field study at a German brokerage, we investigate advised individual investors’ behavior and outcomes after self-selecting into a flat-fee scheme (percentage of portfolio value) for mutual funds. In a difference-in-differences setting, we compare 699 switchers to propensity-score-matched advisory clients who remained in the commission-based scheme. Switchers increase their portfolio values, improve portfolio diversification, and increase their portfolio performance. They also demand more financial advice and follow more advisor recommendations. We argue that switchers attribute a higher quality to the unchanged advisory services.
Institutions: Aarhus University, UNSW Sydney, Goethe University Frankfurt
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $2,490
OpenAlex ID: W4362633763