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School of Business | Department of Finance | Finance | 2015
Thesis number: 14078
Who trusts investment advisors and why?
Author: Nieminen, Tiina
Title: Who trusts investment advisors and why?
Year: 2015  Language: eng
Department: Department of Finance
Academic subject: Finance
Index terms: rahoitus; financing; sijoitukset; investments; neuvonta; counselling; luottamus; trust; rahalaitokset; financial institutions
Pages: 67
Full text:
» hse_ethesis_14078.pdf pdf  size:2 MB (1597941)
Key terms: investment advisor; trust; marginal effect; Eurobarometer 60,2; logistic regression model; financial institutions
Background and objectives:

There is a lack of research on the field of household finance concerning the factors affecting the probability to trust in investment advisors. Therefore this study concentrates on asking the question who trusts investment advisors and why. The findings provide pioneering results on this area of study. Advisory is an important part of banks' operations as advisors serve as sales negotiators for the banks' products. Trusting on advisory has great applications whether banks should invest in advisory and to what extent can the banks be blamed for the investment decisions of their customers.

Data and methodology:

The data used in this study is from Eurobarometer 60.2 survey which is administered by the European Commission. The survey asks for example whether respondent usually trusts the advice given by financial institutions. The data includes numerous variables which are used to explain trust. The study is done by using logistic regression analysis. This study attempts to discover the most relevant factors determining the probability of trusting investment advisors and this is done by examining the effects first individually and then combining them into a final model. Also subsample analysis is provided.


The largest effects this study finds to influence the probability to trust in investment advisors are protection of confidential information by financial institutions and given information clarity and understandability. Other factors affecting the probability to trust are for example gender, home country, perceived difficulty to compare information or change banks, sentiment towards thinking about finances and financial services, having made bank transactions over the Internet and aggressive marketing techniques by financial institutions. Subsample analysis reveals for example significant country differences in these effects.
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