eThesis - School of Business electronic theses

PURPOSE OF THE STUDY The objective of this study is to examine the differences between private banking customers using discretionary portfolio management and the ones using consultative investment advice, and investigate how demographic and investor-type characteristics affect risk taking and investment decision delegation. This study continues the existing studies about investors’ investment decision delegation and risk taking. The paper reveals new information about the determinants affecting the relinquishment of control in financial decision making and risky asset allocations by examining a unique data set of wealthy individual investors.

DATA The data of this study is gathered from several banking databases of a large commercial bank operating in Finland. The data set covers demographic data about individual private banking customers as well as information on customers’ demand analyses and actual investment portfolio allocations as per April 18, 2011. No part of the data contains information which can be connected to any individual customer.

RESULTS Findings of this study indicate that the degree of customer participation in managing investments and an investor’s self-communicated risk profile seem to have an effect on risky asset allocation. Moreover, it appears that consultative investment advice users are more likely to have larger investment portfolios and higher amount invested in stock markets. On the other hand, discretionary portfolio management users are more likely to be male and have larger risky share in their portfolios.