INVESTORS' BEHAVIOR AND PORTFOLIO RISK ADJUSTMENTS: A COMPARISON BETWEEN TWO DIFFERENT CHANNELS OF FINANCIAL ADVICE

Employing a unique dataset of real-world mutual fund portfolio choices made by more than 3,000 Italian investors over a period of 13 years, this paper aims to test whether the portfolio risk level of investors who have a tied agent as their financial advisor is similar to that of those who have a bank employee as their financial advisor. Despite the theoretical presence of an agency problem between tied agents and investors, our results show that investors who have a tied agent as their financial advisor have lower portfolio risk levels compared with those who have a bank employee as their financial advisor.