Trading on Advice

Why do retail investors trade? To analyze the impact of professional advice on trading, we combine administrative and survey data from a large German bank. Investors who report that they always rely on their advisor's recommendations have a 25-percent-higher trading volume. Also, for investors who rely on advice the fraction of products for which their advisors received sales targets is around one third larger. Investors who rely on their advisors are less-educated and have less interest in numbers, they have less trust in their own financial expertise and more trust in that of their advisor and they are more likely to perceive the advice they receive as fair