Financial advisory services meetings and their impact on saving behavior - A difference-in-difference analysis

Earlier research points to negative effects on the risk-weighted return from using financial advisors; moreover, with the incentives given to advisors they seem to increase account turnover as well as the saving volumes directed to mutual funds. In this study, the effects on saving behavior are analyzed and defined as the number of financial products held in stock and the saving volumes transferred monthly to mutual funds. Measuring the near-in-time average effects from one financial advisory meeting on Swedish bank customers, financial products increased by about 2 percent, while funds channeled to mutual funds increased by 22 percent, compared with a control group in which the bank customers had had advisory meetings in the past, but not in the treatment period. This study concludes that the largest effects on saving behavior are observed for the young customers and, in particular, those with low wealth, and for the customers who provide the lowest profitability to the bank. Nevertheless, to conclude that financial advisory meetings are not profitable for the bank is not a proposed managerial implication, rather, the usefulness of an analysis of the time and the actions needed to move customers up into higher profitability is suggested.