Portfolio choice and financial advice

This paper analyzes portfolio allocation decisions of individual
investors. Our dataset records how individuals allocate their money
among risky funds and a money-market fund, and also the characteris-
tics of both the investors and the financial advisors who sell the pro-
ducts. These data offer a unique opportunity to investigate how portfo-
lio decisions are affected by financial advisors. Our empirical strategy
consists in studying the relationship between the share of the total capi-
tal invested in risky funds and the characteristics of buyers and sellers.
Since the dependent variable is bounded between zero and one, we
estimate a fractional response model. We find that the share invested in
risky funds is larger when the advisor is more educated. Furthermore,
male advisors sell larger shares of risky funds than female advisors. We
offer possible explanations for these findings