Abstract
This chapter looks at the different roles that advisors play in the client–advisor relationship. Looking at empirical data, the first section of this chapter shows that the main goal of financial advisory—improving financial returns—is not effectively pursued.
This chapter looks at the ancillary roles that advisors play, which include information transmission, financial education and biases management. The literature assessing the effectiveness of the different ancillary roles is reviewed. The evidence reviewed suggests that the premium that advisors bring to the relationship with their clients can be found in the support they provide at emotional level. Framing the client–advisor relationship as a fiduciary relationship based on trust allows reconciling the evidence reviewed.
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Notes
- 1.
The US BLS provides this definition for a financial advisor: “Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.” Source US BLS website accessed on March 6, 2017, https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm.
- 2.
Generalized trust is measured in the World Value Survey (http://www.worldvaluessurvey.org/wvs.jsp) by asking the following question: “Generally speaking, would you say that most people can be trusted or that you have to be very careful in dealing with people?”
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Cruciani, C. (2017). Financial Advisory: Basic Roles and Functions. In: Investor Decision-Making and the Role of the Financial Advisor. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-68234-1_3
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