New Venture Fund
To study experimentally the market for retail financial advice
The decisions individual households make about consumer financial products can be complicated, and so many people rely on expert advice. But is such advice any good? How well can consumers tell if it is or it isn't? Antoinette Schoar, a finance professor at MIT, and her collaborators have already conducted a pilot "audit study" to address the first question by dispatching trained actors to visit selected advisors. In addition to expanding this research on the supply side of the market for retail consumer financial advice, Schoar's team also plans new laboratory experiments to investigate the demand side of that market by measuring how consumers react to videotapes of different financial advisors. This project has already secured some highly competitive funding from the National Science Foundation, but more is needed to cover the experimental costs of sample sizes large enough to be statistically convincing. Sloan support will provide the necessary funds.