Do Contracts Impact Comprehensive Financial Advice?

21 Pages Posted: 4 Jul 2009 Last revised: 9 Aug 2011

See all articles by Michael S. Finke

Michael S. Finke

The American College

Sandra J. Huston

Texas Tech University

William Waller

Tulane University - Finance & Economics

Date Written: July 4, 2009

Abstract

Delegating management of financial decisions may involve both direct and agency costs. We hypothesize that contracting differences between financial planners and brokers may lead to differences in life insurance adequacy. Using nationally representative data, we estimate the impact of the use of planners and brokers on holding life insurance that replaces a minimum threshold of human capital. Descriptive and multivariate analyses of insurance adequacy are consistent with the hypothesis that contracting matters. Those who rely primarily on financial planners are more likely to have adequate life insurance holdings, while those who rely on the advice of brokers are no more likely to have adequate life insurance than respondents who receive no professional financial advice.

Keywords: Financial Advice, Financial Planning, Agency Theory, Life Insurance

JEL Classification: D14, D86, G22

Suggested Citation

Finke, Michael S. and Huston, Sandra J. and Waller, William, Do Contracts Impact Comprehensive Financial Advice? (July 4, 2009). Available at SSRN: https://ssrn.com/abstract=1429807 or http://dx.doi.org/10.2139/ssrn.1429807

Michael S. Finke (Contact Author)

The American College ( email )

Bryn Mawr, PA 19010
United States

Sandra J. Huston

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

William Waller

Tulane University - Finance & Economics ( email )

A.B. Freeman School of Business
7 McAlister Drive
New Orleans, LA 70118
United States

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