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The Value of Behaviorally-Informed Financial Advice Study
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The first study of its kind measuring the impact of behaviorally informed advice on investor outcomes.

It is common to seek the opinion of an expert when faced with a difficult decision. BEworks' research confirms this phenomenon in a range of consumer scenarios. For instance, parents faced with purchasing a new car seat for their child report placing significantly more trust in the recommendations of traffic safety authorities than members of their family and wider social circle. Beyond seeking advice, there is also the need to follow advice. In what is referred to as the ‘say-do gap,‘ people often have intentions but do not follow through with them by changing their actual behavior. People may join a gym because they want to improve their health, but actually going to the gym is more important for their health than simply joining. Similar phenomena are found across a range of human decisions.

In the context of investment decision making, a classic study shows that simply getting employees to attend a seminar that provides them with advice on how much to save for retirement and allocate their savings across a range of investment options succeeded in changing their intentions. They reported that they intended to save more and select a more optimal asset allocation. Unfortunately, their subsequent behavior was not significantly different from their fellow employees who did not attend the seminar and receive the advice. As a result of not following the advice, their financial well-being did not improve. This 'say-do gap' is a clear illustration of the importance of following advice as well as seeking it. Encouraging people to seek advice is important. Encouraging them to follow the advice provided is even more important.

Financial decision-making is complex, risky, and consequential. Despite the benefits of advice, too many people take a DIY approach and either do not seek advice or ignore some, most, or all of it. The negative results for financial and life well-being are very real. Finding proven techniques to encourage people to seek and follow advice is a critical challenge. This study, the first of its kind, reveals scientifically proven techniques to improve the likelihood of investors seeking and following advice, which can lead to enhanced financial well-being.


Author: BEworks Research Institute
Topic: Financial behaviour/decisions
Location: Canada
Format: Report, Reports/Articles
Content Type: Research
Publication Date: June 23, 2024