Should Your Bank Invest for You? Evidence from Private Banking Accounts
22 Pages Posted: 31 May 2011 Last revised: 13 Aug 2011
Date Written: June 5, 2011
Abstract
We analyze a large data set of private banking portfolios in Switzerland of a major bank with the unique feature that parts of the portfolios were managed by the bank, parts were advisory portfolios. To correct the heterogeneity of individual investors, we apply a mixture model and a cluster analysis. Our results suggest that there is indeed a substantial group of advised individual investors that outperforms the bank managed portfolios, at least after fees. However, a simple passive strategy that invests in the MSCI World and a risk-free asset significantly outperforms both the better advisory and the bank managed portfolios.
Keywords: individual investor, portfolio management, private banking, mixture model, cluster analysis
JEL Classification: C16, G11
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
The Market for Financial Advice: An Audit Study
By Sendhil Mullainathan, Markus Noeth, ...
-
Legal Protection in Retail Financial Markets
By Bruce I. Carlin and Simon Gervais
-
Legal Protection in Retail Financial Markets
By Bruce I. Carlin and Simon Gervais
-
Is Unbiased Financial Advice To Retail Investors Sufficient? Answers from a Large Field Study
By Utpal Bhattacharya, Andreas Hackethal, ...
-
Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study
By Utpal Bhattacharya, Andreas Hackethal, ...
-
Financial Advice and Individual Investor Portfolio Performance
By Marc Kramer