Journal article

Publication year: 2019

Pages: 524-563

Journal: The Review of Financial Studies

Volume number: 32

Issue number: 2

ISSN: 0893-9454

eISSN: 1465-7368

Open access status: Hybrid

DOI Link: https://doi.org/10.1093/rfs/hhy082

Publisher: Oxford University Press

Abstract: 
Homophilyindividuals' affinity for others like themis a powerful principle that governs whose opinions people attend to. Using nearly 2,400 advisory meetings, we find that homophily has a significant positive impact on the likelihood of following financial advice. The increased likelihood of following stems from homophily on gender and age for male clients and from sameness on marital and parental status for female advisees. Moreover, the homophily effect is mitigated by reduced information asymmetry between client and advisor and a long-term relationship with the bank. Our results suggest that client-advisor matching increases individuals' propensity to follow financial advice.

Harvard Citation style: Stolper, O. and Walter, A. (2019) Birds of a Feather: The Impact of Homophily on the Propensity to Follow Financial Advice, The Review of Financial Studies, 32(2), pp. 524-563. https://doi.org/10.1093/rfs/hhy082

APA Citation style: Stolper, O., & Walter, A. (2019). Birds of a Feather: The Impact of Homophily on the Propensity to Follow Financial Advice. The Review of Financial Studies. 32(2), 524-563. https://doi.org/10.1093/rfs/hhy082