Consumer perceptions of financial advisors: Three essays
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Financial service industry is a large sector in the economy and it is important for the overall well-being of the society. Financial planning business, that is the same as many other services in our society, should be considered a commodity product. Economic theory identifies that price and quality are the two basic elements in analyzing a product. This dissertation focuses on analyzing clients’ perceptions of financial services about both the price and quality, and I hope it can contribute to the literature in understanding more about financial service as a product and provide empirical evidences for regulation polices of this special market. The first essay explores whether clients know the amount they paid to their primary financial advisor and concludes that most clients do not know how much they paid. This is especially true for those who paid through commissions. The second essay looks at why some financial advisors were fired during the Great Recession and finds, surprisingly, that the loss of assets was not a driving factor. The third essay shows that clients who have paid commissions only are relatively unsatisfied with their investment performance. However, there are no significant differences in overall satisfaction levels by compensation structure.