Fiduciary Duty and the Market for Financial Advice

• 成果类型: Article
• 署名作者: Bhattacharya, Vivek; Illanes, Gaston; Padi, Manisha
• 署名单位: Northwestern University; National Bureau of Economic Research; University of California System; University of California Berkeley
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA18492
• 发表日期: 2025
• 页码: 1449-1480
• 关键词: BROKERS; entry; COMPETITION; MODEL

摘要

Fiduciary duty aims to solve principal-agent problems, and the United States is in the middle of a protracted debate surrounding the merits of extending it to all financial advisers. Leveraging a transaction-level data set of deferred annuities and state-level variation in common law fiduciary duty, we find that it raises risk-adjusted returns by 25 bp and leads to a 16% decline in the entry of affected firms. Through the lens of a model of entry and advice provision, we show that this effect can be due to both an increase in fixed costs and an increase in the cost of providing low-quality advice. We show how to disentangle these channels and find that both are empirically relevant. Counterfactual simulations show that further increases in the stringency of fiduciary duty monotonically improve advice quality.