Financial advice and bank profits
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Author (Corporation)
Publication date
2018
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Collections
Type
01A - Journal article
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Parent work
The Review of Financial Studies
Special issue
DOI of the original publication
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Series
Series number
Volume
31
Issue / Number
11
Pages / Duration
4447-4492
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Publisher / Publishing institution
Oxford University Press
Place of publication / Event location
Oxford
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Abstract
We use a unique data set from a large retail bank containing internal managerial accounting data on revenues and costs per client to analyze how banks and their financial advisors generate profits with customers. We find that advised transactions are associated with higher profits than independently executed trades of the same client. The bank’s own mutual funds and structured products are most profitable for the bank, and profits increase with trade size. We show that advisors recommend exactly those transactions. Furthermore, we find that advised clients achieve a worse performance than independent clients, suggesting that advisors put their employer’s interest first.
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Subject (DDC)
330 - Wirtschaft
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ISBN
ISSN
1465-7368
0893-9454
0893-9454
Language
English
Created during FHNW affiliation
Yes
Strategic action fields FHNW
Publication status
Published
Review
Peer review of the complete publication
Open access category
Closed
License
Citation
HÖCHLE, Daniel, Stefan RUENZI, Nic SCHAUB und Markus SCHMID, 2018. Financial advice and bank profits. The Review of Financial Studies. 2018. Bd. 31, Nr. 11, S. 4447–4492. DOI 10.1093/RFS/HHY046. Verfügbar unter: https://irf.fhnw.ch/handle/11654/42299