TY  - JOUR
AU  - Chalmers,John
AU  - Reuter,Jonathan
TI  - What is the Impact of Financial Advisors on Retirement Portfolio Choices and Outcomes?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18158
PY  - 2012
Y2  - June 2012
UR  - http://www.nber.org/papers/w18158
L1  - http://www.nber.org/papers/w18158.pdf
N1  - Author contact info:
John Chalmers
Charles H. Lundquist College of Business
University of Oregon
Eugene, OR  97403
E-Mail: jchalmer@lcbmail.uoregon.edu

Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu
AB  - Within the Oregon University System's defined contribution retirement plan, one investment provider offers access to face-to-face financial advice through its network of brokers.  We find that younger, less highly educated, and less highly paid employees are more likely to choose this provider.  To benchmark the portfolios of broker clients, we use the actual portfolios of self-directed investors and counterfactual portfolios constructed using target-date funds, a popular default investment.  Broker clients allocate contributions across a larger number of investments than self-directed investors, and they are less likely to remain fully invested in the default option.  However, broker clients' portfolios are significantly riskier than self-directed investors' portfolios, and they underperform both benchmarks.  Exploiting across-fund variation in broker compensation, we find that broker clients' allocations are higher when broker fees are higher.  Survey responses from current plan participants support our identifying assumption that the portfolio choices of broker clients reflect the recommendations of their brokers.
ER  -