Financial Services Review, 32(3) 

32 
 

Impact of the Financial Advisor on Clients’ Financial 

Outcomes: An Integrative Model 

 

Pierre-Etienne Pilote,1 Emilio Boulianne,2 and Michel Magnan3 

 

Abstract 

A financial advisor may either act as a consultant or may be delegated the entire financial advising 

process. In both cases, researchers tend to conclude that advisors have an impact on their clients’ 

financial outcomes. However, there is no agreement on the nature and extent of this impact. We 

argue that such discordance in the results being reported in prior research arises from the different 

theoretical lens used to observe the phenomenon: agency theory, trust theory, and the concept of 

knowledge. In our view, the complexity of advisors’ contribution to their clients’ outcomes 

requires a novel approach that extends beyond a single theory. Relying upon a literature review, 

we propose an integrative multi-theory model that reconciles prior findings and illustrates how 

financial advisers impact clients’ outcomes at each step within the financial advising process. 

Practice-grounded, the model also provides a causal mechanism clarifying the opaque and complex 

services provided by the financial advisor. 

Creative Commons License 

 
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License 

Recommended Citation 

Pilote, P-E., Boulianne, E., & Magnan, M. (2024). Impact of the financial advisor on clients’ 

financial outcomes: An integrative model. Financial Services Review, 32(3), 32-67. 

 

 
Introduction 

There is extensive evidence indicating that 

financial advisors impact their clients’ financial 

outcomes (Angelova & Regner, 2013; Cici et al., 

 
1 Corresponding author (pilote.pierre-etienne@uqam.ca). École des Sciences de la Gestion, Université du Québec à 

Montréal, Montréal, Canada and John Molson School of Business, Concordia University, Montréal, Canada. For 

valuable comments, we thank participants and discussants at the 2024 Research Workshop on Management Control 

(Jason Moschella, HEC Montréal), 2023 Montreal Business Schools PhD Symposium (Olivier Greusard, ESG-

UQAM) and 2023 ESG-UQAM Workshop. 
2 John Molson School of Business, Concordia University, Montréal, Canada. Emilio Boulianne acknowledges the 

financial support from the KPMG Entrepreneurial Research Studies and the Autorité des Marchés Financiers 

(AMF). 
3 John Molson School of Business, Concordia University, Montréal, Canada and CIRANO, Montréal, Canada. 

Michel Magnan acknowledges the financial support from the S.A. Jarislowsky Chair of Corporate Governance as 

well as from the Institute for the Governance of Private and Public Organizations. 

2017; Martin & Finke, 2014). However, the scope 

and nature of such impacts diverge. This situation 

leads us to put forward the following research 

question: “What is the impact of the financial 

advisor on their clients’ financial outcomes?” To 

https://creativecommons.org/licenses/by-nc/4.0/
https://creativecommons.org/licenses/by-nc/4.0/


Financial Services Review, 32(3) 
 

33 
 

achieve this aim, this paper reviews the literature 

and analyzes such research to propose an 

integrated view on the relation between financial 

advisors and clients’ financial outcomes. 

Financial advisors are the professionals to whom 

clients turn when they do not want to deal with 

their personal finances alone. When an individual 

considers their personal finances, three options 

are available: (1) acting alone, unassisted, (2) 

consulting a financial advisor while keeping 

decision-making autonomy, or (3) delegating all 

steps to a financial advisor (Calcagno et al., 2017; 

Tang & Hu, 2019). Many factors come into play 

in deciding whether to act alone or to seek a 

financial advisor (Balasubramnian & Brisker, 

2016; Finke et al., 2011; West, 2012). The 

evolving complexity of personal finance resulting 

from the advent of new regulations, novel 

financial products, and wealth accumulation 

increasingly leads individuals to solicit the 

services of financial advisors.4 

According to the Financial Industry Regulatory 

Authority (FINRA), the term “financial planners” 

refers to investment advisors, brokers, insurance 

agents, and accountants.5 The Financial 

Consumer Agency of Canada also states that “A 

financial advisor is a general term that can apply 

to anybody who helps you manage your money. 

This could include an employee of your financial 

institution, a stockbroker or an insurance 

agent.”6,7 In this study, a financial advisor is a 

professional working in one of the fields related 

to personal finance and offering services to 

individuals. In using a broad definition of the 

term “financial advisor,” we take the same 

approach as prior research that counts financial 

planners, financial advisor, accountants, lawyers, 

notaries, brokers, bankers, insurance agents, and 

related financial credentials as advisors (see 

 
4 In the United States, the CFP Board (2023) reports 

that 53% of Americans have a financial planner. In 

Canada, 49% of Canadians obtain advice from a 

professional financial advisor/planner (Financial 

Consumer Agency of Canada, 2019). 
5 Retrieved from: 

https://www.finra.org/investors/investing/working-

with-investment-professional/financial-planners 

(accessed on January 14, 2024). 

Gennaioli et al., 2015; Hudson & Palmer, 2014; 

Kim et al., 2018; Lei, 2019).  

Financial advice covers a broad range of 

activities. For instance, personal financial 

planning (PFP) associations and accreditation 

bodies generally identify six or seven core areas 

of financial advising, namely: (1) financial 

management, (2) insurance and risk management, 

(3) investment planning, (4) retirement planning, 

(5) tax planning, and (6/7) estate planning and 

legal aspects (Finke et al., 2009; FP Canada, 

2019). An individual consulting with an advisor 

may seek advice on a specific topic or they may 

wish to implement a comprehensive plan 

(Winchester & Huston, 2015), but regardless, 

they expect added value (Sweeney et al., 2018). 

Financial advisors aim to fill a knowledge gap or 

provide a sense of security to the client (Bae & 

Sandager, 1997). The outcomes associated with 

the advising process depend not only on the steps 

in which the advisor is involved, but also on how 

the advisor acts.  

To answer our research question, we use a 

theoretical review (Paré et al., 2015) with the goal 

of developing a model of the financial advice 

process that integrates three theoretical 

perspectives underlying prior research on 

financial advising. First, agency theory places the 

financial advisor’s self-interest at the forefront, 

ahead of the client’s interests, resulting in a 

negative impact for the client (Angelova & 

Regner, 2013; Beyer et al., 2013; Mullainathan et 

al., 2012). Second, trust theory implies that the 

advisor inspires trust and makes 

recommendations in the client’s best interest 

(Barnett White, 2005; Lachance & Tang, 2012). 

How trust in the advisor may impact the outcomes 

of the advising process remains an open question. 

Third, the concept of knowledge emphasizes the 

role played by the advisor’s proven knowledge 

6 Retrieved from: https://www.canada.ca/en/financial-

consumer-agency/services/savings-

investments/choose-financial-advisor.html (accessed 

on January 14, 2024). 
7 In the United States, the public often misunderstand 

the term “financial advisor” (Lach et al., 2019; Tharp, 

2019). 

https://www.finra.org/investors/investing/working-with-investment-professional/financial-planners
https://www.finra.org/investors/investing/working-with-investment-professional/financial-planners
https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html
https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html
https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html


Pilote et al. 

34 
 

and expertise compared to the client’s limited 

knowledge, suggesting a positive impact for the 

client (Hershey et al., 1990; Hershey & Walsh, 

2000). 

The theoretical perspectives we adopt to analyze 

the literature on the financial advising process 

embed the concept that services rendered by the 

advisor qualify as a “credence good” as the client 

may have difficulty evaluating their ultimate 

effectiveness because of a lack of knowledge 

(Bruhn & Miller, 2014; Gennaioli et al., 2015; 

Winchester & Huston, 2017). A credence good 

consists of a complex and opaque service that 

requires specialized knowledge (Darby & Karni 

1973; Dulleck & Kerschbamer, 2006; Dulleck et 

al., 2011; Fong, 2005). As the client may only see 

the outcomes of financial advice without 

knowing or understanding how the advisor gets 

there, agency problems may arise, explaining 

why agency theory is widely used in financial 

services research. The information gap between 

client and advisor also explains the use of trust 

theory as clients are taking a risk by entrusting 

advisors with their financial affairs since they are 

unable to know the details of their advisor’s 

actions and decisions. Finally, the specialized 

nature of the services rendered by the advisor 

explains the use of the concept of knowledge in 

our analysis.  

From a practical standpoint, our review relies on 

the six steps8 of the PFP process developed by the 

Certified Financial Planner (CFP) Board of 

Standards, Inc. (2017) to proxy for the process of 

providing financial advice: (1) agreeing on how 

to work together, (2) gathering information, (3) 

analyzing the client's situation, (4) providing 

recommendations, (5) implementing the 

recommendations, and (6) monitoring progress 

(CFP Board, 2017). Put forward to frame the 

work of CFP professionals, we consider that these 

steps represent a golden standard in financial 

services and remain general enough to fit most 

financial advisory services. In this regard, we 

 
8 We constructed our model based on these six steps. 

We are aware that the CFP Board recently introduced 

a seven-step model, which is very similar to the six 

steps. Our rationale to keep the six-step model is that 

prior research used for the model has been published 

expect most financial advisors to follow similar 

steps as those proposed by the CFP Board. 

Although some articles specify which step they 

address (e.g., Angelova & Regner, 2013; Barnett 

White, 2005; Hershey et al., 1990), the usage of 

steps to analyze the articles is mainly ours. In our 

view, using these steps allows researchers to 

bridge the gap between research and practice. 

Our main research contributions are as follows. 

First, we propose a theory-driven review of the 

financial advising literature, relying on three 

theoretical lenses to explain the financial 

advisor’s impact. Second, we propose an 

integrative model of the financial advisor’s 

impact, linking the three theoretical lenses and 

explaining the divergent results found in prior 

research. This model allows one to integrate the 

reality of the financial advising environment by 

linking the effects of the advisor’s level of 

involvement to the steps performed in practice, 

thus enhancing the model’s relevance for both 

academics and practitioners. Lastly, based on 

four financial advising core questions developed 

in this paper, we contribute to better capturing the 

key concept of credence good, as provided by a 

financial advisor’s services, and provide 

explanations on how an advisor’s involvement 

will impact their clients’ financial outcomes 

compared to when an individual decides to act in 

an unassisted manner. 

Theorization of Financial Advising 

Agency Theory  

Agency theory refers to an arrangement whereby 

the principal delegates some of their decision-

making power to an agent. As each party seeks to 

maximize their personal interests, the goals 

pursued by the principal are in opposition with the 

goals pursued by the agent (Jensen & Meckling, 

1976). This conflict is embedded in an 

during the tenure of the six-step model, and the new 

step is a split of existing ones. After analysis, we did 

not find significant differences when we looked at our 

data with an additional step.  



Financial Services Review, 32(3) 
 

35 
 

asymmetry of information favoring the agent 

(Ross, 1973; Wright et al., 2001).  

Financial advising meets the characteristics 

associated with agency theory. There exists a 

contractual relationship between a principal (the 

client) and an agent (the advisor), a clash of goals 

wherein the client wants their assets to grow, 

while the advisor seeks to derive personal benefit 

from the actions taken on the client’s behalf. To 

overcome this conflict of interest, the client can 

either set up control mechanisms to monitor the 

advisor’s actions or motivate the advisor to act in 

the best interests of both parties by offering 

incentives (Jensen & Meckling, 1976; Wright et 

al., 2001). Unfortunately, the impact on the 

outcomes of these controls is uncertain, and 

controls and incentives add costs to the client. 

For instance, research indicates that individuals 

are unable to answer basic financial literacy 

questions (Boisclair et al., 2017; Lusardi & 

Mitchell, 2011, 2014).9 Thus, clients lack the 

knowledge to assess the complex steps and 

actions carried out by an advisor, challenging 

their ability to implement effective controls. 

Further, clients are in a difficult position to 

incentivize advisors, since they do not have full 

control over all the incentives offered to the 

advisor. For example, the advisor’s employer 

may compensate the advisor to sell certain 

products, which influences the advisor’s 

recommendations and actions (Inderst & 

Ottaviani, 2012a, 2012b; Kingston & Weng, 

2014). In such a case, it becomes difficult and 

costly for the client to implement incentives that 

can really drive behavior, such as prioritizing the 

client’s interest. Moreover, most clients cannot 

estimate how much their advisor’s services cost 

 
9 Research around the world indicates that between 

30% and 55% of respondents correctly answer the 

three core questions on financial literacy. In Canada, 

the rate is 42% (Boisclair et al., 2017), while in the 

United States the rate is 30% (Lusardi & Mitchell, 

2011). The three core questions are: Question 1, on 

interest rates: “Suppose you had $100 in a savings 

account and the interest rate was 2% per year. After 

five years, how much do you think you would have in 

the account if you left the money to grow? More than 

them, or do not know how their advisor is 

compensated (Cheng & Kalenkoski, 2018). 

Trust Theory 

Several definitions of trust exist, but the one 

posited by Mayer et al. (1995) is relevant to our 

study: “the willingness of a party to be vulnerable 

to the actions of another party based on the 

expectation that the other will perform a 

particular action important to the trustor, 

irrespective of the ability to monitor or control 

that other party” (p. 712). Common to most 

definitions is that a trust relationship cannot exist 

without the presence of a person who trusts 

(trustor), a trusted party (trustee), and a context 

involving risk-taking by the trustor.  

It is remarkable how financial advising meets the 

characteristics of trust theory. First, it involves a 

relationship between a person who trusts (the 

client) and a person the client trusts (the advisor). 

Second, by delegating all or some steps to the 

advisor, the client is de facto taking a large risk 

and finds themselves in a vulnerable position. For 

instance, at the gathering information, analysis, 

and recommendation steps of the financial 

advising process, the client must let the advisor 

take actions that not only influence their financial 

outcomes, but whose accuracy cannot be fully 

assessed. 

The Concept of Knowledge 

Three types of knowledge are widely recognized 

(Paris et al., 1983). First, declarative knowledge 

(“know what”) is the accumulation of concepts, 

facts, rules, laws, and principles (Anderson, 1982, 

1983; Gupta & Cohen, 2002; Paris et al., 1983). 

Tardif (1992) considers declarative knowledge as 

fundamentally static, rather than dynamic, and 

$102; Exactly $102; Less than $102; Don’t know”; 

Question 2, on inflation: “Imagine that the interest rate 

on your savings account was 1% per year and inflation 

was 2% per year. After one year, how much would you 

be able to buy with the money in this account? More 

than today; Exactly the same; Less than today; Don’t 

know;” and Question 3, on diversification: “Is the 

following statement true or false? Buying a single 

company’s stock usually provides a safer return than a 

stock mutual fund. True; False; Don’t know.” 



Pilote et al. 

36 
 

thus must be translated into procedural or 

conditional knowledge to enable action. Second, 

procedural knowledge (“know how”) relates to 

the steps and procedure followed to carry out an 

action (Tardif, 1992). But, as Anderson (1982) 

points out, declarative knowledge is necessary to 

implement procedural knowledge, as it would not 

be useful to know “how to do” if one does not 

know “what to do.” Third, conditional knowledge 

(“know when and why”) refers to the conditions 

surrounding the action (Schunk, 2012; Tardif, 

1992). For instance, when and in what context is 

it appropriate to use a specific strategy, to favor 

this or that approach, or to take this or that action? 

Gaining an understanding of “what, how, when, 

and why,” based on declarative and procedural 

knowledge, positions conditional knowledge at 

the top of the knowledge pyramid. 

Knowledge may also be viewed as domain-

specific or general (Perkins & Salomon, 1989; 

Schunk, 2012). Specific knowledge applies to 

explicit domains and is of more limited use, while 

general knowledge refers to skills like reading 

and writing, transcending disciplinary fields and 

extending to many domains and situations 

(Perkins & Salomon, 1989; Schunk, 2012). 

Researchers agree that solving a given problem 

requires both specific and general knowledge. 

Further, domain-specific and general knowledge 

do not add to the three categories presented 

above, but rather complement them (Tardif, 

1992). 

When it comes to financial advising, individuals 

who deal with an advisor do so on the premise 

that, due to their cumulative general and specific 

knowledge, the advisor will add value to their 

outcomes (Sweeney et al., 2018). Financial 

advisors possess higher levels of financial 

literacy knowledge than individuals (Azamian et 

al., 2022), are more analytical (Nofsinger & 

Varma, 2007), and rely on an established 

problem-solving approach (Hershey et al., 1990). 

Furthermore, the understanding acquired by 

financial advisors encompasses all kinds of 

knowledge (declarative, procedural, and 

conditional), namely, the “what, how, when, and 

 
10 At this point, an article can be counted more than 

once if it appears in more than one database. 

why.” A large majority of individuals do not have 

such an advanced level of personal finance 

knowledge. In other words, due to their lack of 

knowledge, individuals are very unlikely to be 

able to adequately manage their personal 

finances, and more specifically when compared 

to financial advisors.  

Method 

Based upon a literature review, we developed a 

theory-grounded integrative model showing the 

impact of the financial advisor on their clients’ 

financial outcomes. Our choice of a theoretical 

review rests on the following premises. First, 

from such a review may emerge theoretical 

conceptualizations of a phenomenon, or 

advancement at a theoretical level, otherwise 

known as a theoretical review (Paré et al., 2015), 

a theory development review (Templier & Paré, 

2018), or an integrative review (Snyder, 2019). 

Second, a theoretical literature review proves 

especially appropriate when studying a 

phenomenon that covers different fields of 

expertise drawing on various research 

perspectives (Torraco, 2005). In addition, 

advisors, coming from different fields such as 

financial planning, accounting, law, notarial law, 

securities brokerage, insurance, and banking, to 

name a few, may be involved at different steps of 

the financial advising process. 

 

Data Collection 

The review comprised four phases as described 

below (Figure 1). First, we searched, using three 

databases, the possible combinations of financial 

advisor and the three theoretical lenses. The 

search terms (presented in Figure 1) needed to 

appear either in the title, the keywords, or the 

abstract of articles. Based on these criteria, we 

identified 2,160 results.10 Second, we sought to 

narrow down the results. We analyzed the title 

and abstract of each article based on three pre-

established criteria: (1) the article must focus on 

the presence of an advisor in the financial 

advising process, (2) the article must explicitly or 

implicitly be linked to one of the three theoretical 



Financial Services Review, 32(3) 
 

37 
 

lenses, and (3) the article must be from an 

academic journal.11 Based on these criteria, we 

retained 131 articles.12 Third, focusing on these 

131 articles and their references, we identified 

relevant articles that may not have been identified 

in the initial search (see Webster & Watson, 

2002). Following this review, we added 106 

articles, thus bringing the total number of articles 

to 237. Finally, we read the 237 articles in their 

entirety and evaluated them using the same 

criteria used in the second phase, thus bringing 

our final dataset to include 88 articles. 

Appendix A summarizes the 88 articles. For each 

article, the table provides the authors, the type of 

financial advisor, the method used, the 

measurement, the outcome, and the study 

findings. For a better analysis, and in line with the 

integrative model, we present the articles 

categorized through the three theoretical lenses. 

The dataset reflects the diversity of expertise and 

fields associated with financial advising, as it 

includes articles published in marketing, finance, 

economics, psychology, management, 

accounting, and financial planning. As an aside, 

even if the PFP field is of prime importance for 

individuals and the economy, it is surprising to 

see the limited number of journals dedicated to 

PFP. 

 

Figure 1. Literature Review Search Steps 

 
 

 
11 This criterion mostly explains the sharp reduction of 

articles since there is an important number of 

professional publications in financial planning. 

 

12 From this point on, the results from the three 

databases were combined, eliminating the possibility 

of the same article being counted more than once.  



Pilote et al. 

38 
 

Data Analysis 

The data analysis builds upon the three theoretical 

perspectives and relies on the six steps of the PFP 

process developed by the CFP Board (2017) as a 

proxy for the financial advising process (Figure 

2). Based on the combination of the theoretical 

perspectives and the six steps, we pinpoint where 

in the process and how the advisor affects their 

clients’ financial outcomes.  

Figure 2. Six Steps of the Financial Advising Process 

 
 

The first step, agreeing on how to work together, 

sets the parameters of the relationship between 

the financial advisor and the client. It consists of 

a deal specifying the services provided by the 

advisor, such as the next steps where the advisor 

will be involved. The second step, gathering 

information, covers the collection of information 

and documents from the client for analysis. At the 

third step, analyzing the situation, the advisor 

assesses the client’s financial situation to identify 

relevant strategies and options, weighing the 

benefits of each, to develop recommendations. At 

the fourth step, providing recommendations, the 

advisor provides recommendations to the client 

on how to best optimize their financial outcomes. 

The fifth step, implementing the 

recommendations, involves ensuring the 

implementation, either by the client or the 

advisor, according to the terms of the deal 

established in Step 1. The sixth step, monitoring 

progress, closes the loop. It consists of assessing 

the evolution of the situation and adjusting when 

the conditions require it. The sixth step brings a 

circularity to the process as it leads to a relaunch 

of the process when needed. 

Winchester and Huston (2015) report that 

financial advice may fall into either a modular 

approach, when happening on an ad hoc basis 

regarding a specific topic, or an integrated 

approach, when advice follows a comprehensive 

process staggered over time. Only the level of 

involvement of the actors (client or advisor) 

changes according to the six steps. For instance, 

Figure 3 shows the six steps when a client 

delegates the process (from steps 2 through 6) to 

an advisor, while, when clients opt for 

consultation, they retain the right to implement or 

not the advisor’s recommendations (thus taking 

control of step 5). Depending on the arrangement, 

step 6 (monitoring progress) may either be the 

responsibility of the client or part of the mandate 

given to the advisor. 

 

 

 

 

 

 

 

 

 

 



Financial Services Review, 32(3) 
 

39 
 

Figure 3. Possible Arrangements between the Client and the Advisor 

 
 

We consider that these six steps, even if 

developed to frame the financial planning 

process, adequately capture the financial advising 

process as they are quite generic and focus on a 

client-advisor relationship. 

Findings 

Three main findings arise from our analysis. First, 

the advisor’s impact on their clients’ financial 

outcomes depends upon the theoretical lenses 

used and the executed steps. Second, the review 

brings forward the need for an integrative model, 

since the articles report divergent results. Third, 

the review highlights other factors, such as the 

type of advisors involved, which refers to the 

holding of different professional designations.  

Financial Advising and Agency Theory 

Prior research reports on the clash of interests at 

an aggregate level (Dvorak, 2015; Hackethal et 

al., 2012; Mullainathan et al., 2012), as well as at 

specific steps (Angelova & Regner, 2013, 2018; 

Chalmers & Reuter, 2020; Foerster et al., 2017). 

Advisors can maximize their own interest at the 

expense of their clients, first by taking financial 

advantage of third-party offerings when issuing a 

recommendation and monitoring (Anagol et al., 

2017; Christoffersen et al., 2013; Hackethal et al., 

2012), and second by providing minimal effort 

when analyzing and monitoring (Dvorak, 2015; 

Liu, 2005). 

The financial advisor’s effort is mainly observed 

through the customization of their clients’ 

portfolios. In a comparative analysis of advisory 

firms’ retirement plans and their clients’ 

retirement plans, Dvorak (2015) shows that both 

retirement plans are very similar, with the 

exception that plans offered to clients favor 

investments with higher fees. Advisors minimize 

the effort and maximize the fees charged to 

clients by limiting the customization of clients’ 

retirement plans. Similarly, Foerster et al. (2017) 

find that advisors offer an imperfect copy of their 

personal portfolio to their clients. By 

recommending a comparable asset allocation 

base to all clients, advisors limit their efforts 

while receiving compensation for the actions 

taken. Foerster et al. (2017) estimate that clients 

annually pay fees of around 2.5% of their assets 

to obtain the same advice given to all other 

clients. Bolton et al. (2007) find that if higher fees 

can be earned, the more the recommendations 

will be detrimental to the client. Other tactics 

used by advisors include pressing clients to make 

more trades, which increases advisors’ fees 

(Hackethal et al., 2012; Hoechle et al., 2017), or 

recommending a suboptimal or wrong investment 

option to clients while favoring advisors’ fees 

(Angelova & Regner, 2013, 2018; Kingston & 

Weng, 2014). In short, consistent with an agency 

theory perspective, some advisors prioritize their 

own interests over their clients’ interests (Burke 

et al., 2015). 



Pilote et al. 

40 
 

However, a long-term horizon relationship 

(Jarratt et al., 2007), a competitive market 

(Bolton et al., 2007; Stoughton et al., 2011), and 

the setting up of control mechanisms (Calcagno 

et al., 2017) do mitigate the conflict of interests in 

financial advising. Considering the precarious 

position of the clients, Chalmers and Reuter 

(2020) even suggest that an individual would 

receive a better service from well-constructed 

default financial advice than from a conflicted 

financial advisor. For instance, advanced 

software makes it possible nowadays to obtain 

such default financial advice at a low cost. 

Financial Advising and Trust Theory 

Clients may either fully trust their advisor and 

thereby consent to the advisor’s power on their 

financial outcomes, or they may not fully trust the 

advisor, for a variety of reasons, and will prefer 

to limit the advisor’s impact. Related to financial 

advising, two steps prove critical regarding the 

trust relationship: the agreeing step, when the 

client chooses to either delegate or consult the 

advisor on an ad hoc basis, and the implementing 

step, where the client relies on the advisor’s 

recommendations. 

Our review reveals two main findings related to 

trust theory. First, the more the client trusts the 

advisor, the more likely it is that the client will 

completely delegate to the advisor (Calcagno et 

al., 2017; Gennaioli et al., 2015; Monti et al., 

2014). Second, the more the client trusts the 

advisor, the more likely is it that the client follows 

the advisor’s recommendations (Barnett White, 

2005; Deng & Liu, 2017; Eriksson & 

Hermansson, 2019; Georgarakos & Inderst, 2014; 

Johnson & Grayson, 2005; Lachance & Tang, 

2012; Pauls et al., 2016). Moreover, trust does 

allow clients to relieve themselves of the mental 

burden of managing their finances. For instance, 

in the context of a laboratory experiment 

measuring brain activity, Engelmann et al. (2009) 

find that clients prefer to delegate the mental 

burden of making investment decisions by 

following advisors’ recommendations. 

Financial Advising and the Concept of 

Knowledge 

The advisor’s knowledge plays a key role during 

the financial advising process and ultimately 

impacts its effectiveness (Hershey et al., 1990; 

Hershey & Walsh, 2000). Translated into the six-

step framework, advisors seem particularly adept 

at : (1) Gathering information, (2) Analyzing the 

situation, and (3) Monitoring progress. In short, 

equipped with superior knowledge, advisors may 

directly influence their client’s financial 

outcomes. For instance, regarding their personal 

financial situation, Azamian et al. (2022) report 

that financial advisors are better prepared for 

retirement, have less debt, are better insured, and 

are more likely to have an estate plan than the 

public. For clients with an advisor, studies report 

greater value of assets held (Liu et al., 2019), 

better portfolio diversification (Pan et al., 2020), 

better use of tax instruments (Cici et al., 2017), 

and reduced wealth volatility (Grable & 

Chatterjee, 2014). As positive influences on their 

clients, we may cite the clients’ saving practices 

(Chatterjee & Lu, 2023; Fan, 2021; Mountain et 

al., 2021) and the setting and committing to 

financial goals (Marsden et al., 2011; Martin & 

Finke, 2014).  

Some studies on advisors’ knowledge credit their 

positive impact on their clients’ financial 

outcomes to knowledge that can be viewed either 

as declarative (i.e., an accumulation of facts, 

concepts, or rules) (Cloyd, 1995, 1997; Hershey 

& Walsh, 2000; Spilker, 1995) or as procedural 

(i.e., systematic steps and procedures) (Barrick & 

Spilker, 2003; Fischer & Gerhardt, 2007; 

Hershey et al., 1990). Research indicates that 

advisors with specialized knowledge obtain better 

results in information search strategies, the 

quantity of results, and the relevance of the 

information found (Barrick & Spilker, 2003; 

Cloyd, 1995, 1997; Hershey & Walsh, 2000; 

Spilker, 1995). Hence, an advisor’s knowledge 

positively affects the quality of the analysis 

performed (Hershey & Walsh, 2000), with its 

declarative and procedural forms being the most 

salient. Such knowledge permits them to perform 

better problem-solving processes, reducing 

errors, and thereby providing higher quality 

solutions to clients (Hershey et al., 1990). 

Financial Professional Designations  



Financial Services Review, 32(3) 
 

41 
 

Holding a professional designation (e.g., CFP®) 

may modulate the impact of the advisor on their 

clients’ financial outcomes as it positively 

influences the client’s trust in the financial 

advisor (Agnew et al., 2018; Dean, 2017; 

Guillemette & Jurgenson, 2017; James, 2013) as 

well as the level of knowledge of financial 

advisors (Arman & Shackman, 2012; Blanchett, 

2019; Kim et al., 2018; Lei, 2019). Underlying 

these findings is the evidence that holding a 

professional designation that includes a code of 

ethics induces the advisor to put the interests of 

their clients first (Finke et al., 2009). For 

example, both in Canada and the United States, 

CFPs must follow the code of ethics’ principles 

of their designations. Those codes include 

notably fiduciary duty, duty of loyalty to the 

client, integrity, competence, diligence, 

professionalism, and confidentiality (CFP Board, 

2018; FP Canada, 2022). However, we leave the 

analysis of the impact of designations to future 

research.  

 

 

Toward an Integrative Model of Financial 

Advising 

We present in this section an integrative model 

showing the impact of the financial advisor on 

their clients’ financial outcomes. We elaborate 

the model in two phases. First, in Figure 4, we 

discuss and illustrate the impacts associated with 

each of the three theories for each step where they 

manifest. Second, in Figure 5, we present the 

integrative model of financial advising across the 

three theories, when the process is performed 

alone (unassisted) versus when the process is 

performed with a financial advisor. The 

integrative model shows how the interactions 

between the three theoretical lenses impact 

clients’ financial outcomes. 

Impacts on Clients’ Financial Outcomes 

associated with each Theoretical Lens 

Figure 4 summarizes the findings where the 

advisor’s impact on their clients’ financial 

outcome may be positive or negative. Figure 4 

includes the case when clients choose to delegate 

the entire process to an advisor, as well as when 

clients opt for ad hoc consultations at certain 

steps.

 

Figure 4. Summary of the Impacts (positive or negative) of the Financial Advisor on Their Clients’ 

Financial Outcome 

  



Pilote et al. 

42 
 

 

Agency theory. Using an agency theory 

perspective, incentives outside the client’s reach 

and the lack of control over the advisor’s actions 

creates a clash of interests that leads advisors to 

maximize their own interests at the expense of the 

client. More specifically, the lack of client control 

over the advisor’s actions is seen at the analyzing 

(Foerster et al., 2017), recommendations 

(Angelova & Regner, 2013), and monitoring 

steps, while the negative impact of incentives 

plays out at the recommendations (Angelova & 

Regner, 2013) and monitoring steps (Hoechle et 

al., 2017). Figure 4 illustrates this direct negative 

impact where advisors are thinking of themselves 

first when they are presented with the opportunity 

to do so. 

Trust theory. With a client-advisor trust 

relationship, it is when agreeing on how to work 

together and on implementing the 

recommendations that trust has its greatest 

impact. The more clients place trust in their 

advisors, the more they delegate power (Monti et 

al., 2014) and the more they follow their advisors’ 

recommendations (Barnett White, 2005). 

Accordingly, the impact on the clients’ financial 

outcome can be positive or negative, depending 

on the level of trust placed in the advisor.  

But what may be the impact of trust on the other 

steps? One may say that the importance of trust is 

rather evident when gathering information, since 

an advisor’s analysis of a client’s situation 

depends upon the information available (Hershey 

et al., 1990). In other words, clients may ask 

themselves if they should provide all relevant 

personal information to their advisor? Fischer and 

Gerhardt (2007) and Foerster et al. (2017) argue 

that when the client provides private information, 

this allows the advisor to personalize 

recommendations. Accordingly, the client should 

provide all available information to the advisor. 

On this point, Omarzu (2000) mentions that 

clients must consider the risk associated with the 

disclosure of personal information, where such 

risk brings trust theory into play. The level of trust 

a client has in the advisor will determine the level 

of information sharing. Here, trust in the advisor 

can directly and positively impact clients’ 

financial outcomes. Figure 4 illustrates this 

essential element to reflect the impact of trust 

theory more accurately at the gathering 

information step. To our knowledge, this 

information is often overlooked in the data we 

analyze (one exception is Alsemgeest (2022)). 

This element appears in Figure 4 as a blue plus 

symbol surrounded by a circle. 

Concept of knowledge. Based on prior research, it 

is when gathering information, analyzing the 

situation, and monitoring progress that the 

concept of knowledge plays an important role and 

where it has a positive impact. Equipped with 

proven knowledge, the financial advisor can: (1) 

better identify the information needed for 

analysis, (2) better assess the client-specific 

situation and possible options, and (3) better 

determine whether to restart the process based on 

the results obtained (Hershey et al., 1990; 

Hershey & Walsh, 2000). Figure 4 illustrates the 

direct and positive impact of the advisor’s level 

of knowledge.  

Synergistic Effect of the Three Theoretical Lenses 

The interplay between agency theory, trust 

theory, and the concept of knowledge 

complexifies an advisor’s contribution to their 

clients’ financial outcomes due to a synergistic 

effect. Depending on the theoretical perspectives 

taken, the advisor may have a positive impact or 

a negative impact. 

Figure 5 proposes an integrative model of this 

synergistic effect based on four core questions 

associated with the six steps, namely: 

1. Does the client trust the advisor? 

2. Does the advisor prioritize the client’s 

interest? 

3. Does the advisor mobilize their financial 

knowledge? 

4. Does the client agree to disclose all 

relevant personal information? 

The integrative model resembles a decision tree, 

where the individual answers the four questions 

by “yes” or “no.” The model helps to understand 

what is inside the “black box;” that is, the services 



Financial Services Review, 32(3) 
 

43 
 

provided by the advisor, a credence good. Three 

elements underlie the integrative model: (1) the 

four questions provide a priority order, (2) the 

step in the process determines which theoretical 

lens will dominate, and (3) a theory applies or not 

depending on whether the individual performs the 

process alone or is assisted to various degrees by 

a financial advisor.  

Figure 5 illustrates the advisor’s impact on 

outcomes by contrasting when the process is 

carried out alone (unassisted), with the outcome 

set to zero, or with an advisor, even if factors such 

as individual financial knowledge may affect the 

financial outcome. We aim to conceptualize an 

anticipated positive outcome when the financial 

advisor is involved, as well as situations where 

the advisor’s involvement may result in an 

outcome that may be equal to or worse than when 

an individual acts alone. We will now turn to an 

analysis of findings around the four core 

questions. 

Figure 5. Integrative Model of the Impact of Financial Advisors on Their Clients’ Financial 

Outcomes 

 

 

Does the client trust the advisor? The answer to 

that question underlies agreeing on how to work 

together and implementing the recommendations. 

For these two steps, trust theory plays a primary 

role over the two other theoretical lenses since the 

client delegates to the advisor. When the client 

trusts the advisor, then the effects of agency 

theory and the concept of knowledge may come 

into play to influence the outcome of the process.  

At the implementation step, if the client does not 

accept the advisor’s recommendations, the 

negative impact related to an advisor’s self-

interest or the positive impact related to an 

advisor’s knowledge will not manifest 



Pilote et al. 

44 
 

themselves in the financial outcome. Stated 

otherwise, using a trust theory lens, a decision by 

a client to turn down an advisor’s 

recommendation results in a positive impact if the 

recommendation is harmful, and in a negative 

impact if the recommendation is beneficial 

(Monti et al., 2014). However, if the client 

accepts the advisor’s recommendations, it places 

the individual in a vulnerable position where they 

cannot mitigate the effects, positive or negative, 

associated with the other steps of the process. As 

a reminder, trusting can be beneficial, but over-

trusting can lead to abuse by the financial advisor 

(Gennaioli et al., 2015; Schwartz et al., 2011). 

Does the advisor prioritize the client’s interests? 

This question puts forward agency theory, with 

emphasis on analyzing the situation, providing 

recommendations, and monitoring progress. 

Here, the client trusts the advisor, opening the 

door to potential conflicts of interest, depending 

on whether the advisor prioritizes their interests 

or the clients’ interests. If an advisor maximizes 

their own interests, not only does it negatively 

impact their clients’ financial outcomes, but it 

also cancels the effects of the concept of 

knowledge. In this regard, Blanchett (2019) and 

Bergstresser et al. (2009) report that the advisor’s 

conflict of interest can negate the benefits 

associated with the advisor’s knowledge and 

expertise. Alternatively, if advisors prioritize 

clients’ interests, then they can make use of their 

knowledge. When the client and advisor’s 

interests coincide, the advisor can have a strong 

positive influence on a client’s financial 

outcomes (Finke, 2013). 

Does the advisor mobilize their financial 

knowledge? This question comes into play when 

the client trusts the advisor and when the advisor 

prioritizes clients’ interests. The advisor’s 

knowledge will impact a client’s financial 

outcome when gathering information, analyzing 

the situation, and monitoring progress. When the 

advisor has specific knowledge helpful for 

dealing with a given situation, being able to 

leverage their skills and expertise to maximize the 

client’s interests, this may have a significant 

positive impact. Alternatively, when the advisor 

does not have the necessary knowledge or is 

unable to leverage the required knowledge, this 

will not only negate the advisor’s influence but 

will also prevent trust theory from manifesting 

itself at the gathering information step. 

Does the client agree to disclose all relevant 

personal information? The last question involves 

trust theory when gathering information. Full 

disclosure of clients’ personal information to the 

advisor will impact the clients’ financial 

outcomes under the following conditions: (1) the 

client follows the advisor’s recommendations or 

has delegated the entire process to the advisor, (2) 

the advisor prioritizes the client’s best interests, 

and (3) the advisor is competent and mobilizes 

their knowledge. When these three conditions are 

present and clients disclose all relevant personal 

information, advisors find themselves in a 

position to personalize their advice and achieve 

“optimal” results (Fischer & Gerhardt, 2007; 

Foerster et al., 2017). In addition, sharing of 

private information by the client allows the 

advisor to achieve a greater positive impact on 

their clients’ financial outcome. 

Conclusion, Limitations, and Future Research 

This paper presents the current state of 

knowledge regarding the impact of financial 

advisors on their clients’ financial outcomes. 

Based on a review and analysis of prior research 

and using the six steps of the PFP process as a 

template for financial advising, we document in 

detail where the advisor may play a positive or 

negative role for their clients. We then propose an 

integrative model, linking three theoretical 

lenses, namely agency theory, trust theory, and 

the concept of knowledge, when the process is 

performed alone (unassisted) or with a financial 

advisor. The integrated model helps to answer our 

research question, which is, “What is the impact 

of the financial advisor on their clients’ financial 

outcome?” 

In summary, agency theory underlies clients’ 

financial outcomes via advisor actions when 

analyzing, recommending, and monitoring. An 

advisor’s conflict of interests will manifest itself 

directly and negatively on clients’ financial 

outcomes. Trust theory provides a useful 

conceptual lens at various steps of the financial 

advising process. When gathering information, 



Financial Services Review, 32(3) 
 

45 
 

the client’s trust with respect to the advisor 

directly and positively influences the outcome. 

However, when agreeing on how to work 

together and when implementing advisor 

recommendations, trust in the advisor may 

manifest indirectly, either positively or 

negatively. As for the concept of knowledge, it 

positively and directly influences the outcome of 

the process via its impact on the advisor’s 

gathering information, analyzing, and 

monitoring. These three theoretical lenses 

interact in a specific sequence, as shown in Figure 

5, providing a better understanding of the impact 

of the financial advisor.  

Our main research contributions are as follows. 

First, we propose a theory-driven review of the 

financial advising literature, relying on three 

theoretical lenses to explain the financial 

advisor’s impact. Second, we propose an 

integrative model of the financial advisor’s 

impact, linking the three theoretical lenses and 

explaining the divergent results found in prior 

research. This model allows researchers and 

practitioners to integrate the reality of the 

financial advising environment by linking the 

effects of the advisor’s level of involvement to the 

steps performed in practice, thus enhancing the 

model’s relevance for both academics and 

practitioners. Last, based on four financial 

advising core questions developed in this paper, 

we seek to better capture the key concept of 

credence good, as provided by a financial 

advisor’s services, and provide explanations on 

how the advisor’s involvement will impact their 

clients’ financial outcome compared to when an 

individual decides to act in an unassisted manner.  

This study contributes to the growing interest of 

academics, financial advisors, professional 

associations, regulators, financial institutions, 

and society in examining the role played by 

financial advisors for their clients. A healthy and 

prosperous economy depends notably on 

financially literate individuals, but the latter are 

facing an increasingly complex financial 

marketplace. How can individuals navigate 

financial decisions in challenging times? Should 

financial decisions rest with the individual alone 

or be a function of both individual decisions and 

advisory assistance? In the United States, 

Canada, and abroad, the financial advising 

ecosystem should enable individuals to access, 

understand, and use financial products and 

services to their benefit. It should be easy for 

everyone to manage their revenues, expenses, 

debts, and savings. Accordingly, the current study 

also adds to the financial literacy domain. 

This research has limitations. The role played by 

financial advisors is very important to investigate 

but difficult to research, given the complexity of 

financial advisors’ service as a credence good and 

its impact on their clients’ financial outcome. 

Even if personal finance is critical for individuals 

and in the economy, surprisingly, research in the 

area is rather limited and scattered. For instance, 

quality academic journals specialized in PFP are 

very rare. That said, our review of prior research, 

and our analysis through theoretical frameworks, 

has still permitted us to identify relevant articles 

to develop an integrative model. We agree that 

our model provides a limited picture of a complex 

construct and requires further investigations.  

For future research, it would be relevant to 

validate empirically the integrative model 

developed. Case studies and interviews should be 

conducted with stakeholders, such as advisors, 

banks, and clients, to know more about the 

financial advising process and, more importantly, 

the role played by financial advisors. Professional 

associations such as FP Canada or the US CFP 

Board should be involved. Collecting data using 

a diversity of methods among various 

stakeholders may only help to better capture the 

phenomena. Financial professional designations 

also seem to modulate the impact of the advisor 

on their clients’ outcome through various 

training, certifications, and diplomas. How 

designations impact clients’ perceptions in the 

process requires investigation. Future research 

may also look at how advisors use technology, 

such as software, to access specialized 

knowledge. 

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Financial Services Review, 32(3) 

53 
 

Appendix A 

Table of Articles 

Authors Type of Financial 

Advisor 

Methodology Measurement of 

Agency, Trust, or 

Knowledge 

Outcome 

Measurement 

Findings 

Agency Theory 

 

Anagol et al. 

(2017) 

Insurance agents Field 

experiment 

(audit study) 

Choice of self-serving 

recommendations 

Different life insurance 

options 

Advisors are more likely to 

recommend the option that 

maximizes their commission  

Angelova & 

Regner (2013) 

Participants acting 

as financial 

advisors 

Lab experiment Choice of self-serving 

recommendations 

Different investment 

options 

Advisors are more likely to 

recommend the option that 

maximizes their commission  

Lump sums lead the advisor to 

recommend more the favorable 

option for the client 

Angelova & 

Regner (2018) 

Participants acting 

as financial 

advisors 

Lab experiment Choice of self-serving 

recommendations 

Different investment 

options 

Advisors are more likely to 

recommend the option that 

maximizes their commission 

Competition and reputation can 

lead the advisor to recommend 

more the favorable option for 

the client 

Beyer et al. 

(2013) 

Participants acting 

as insurance 

advisors 

Lab experiment Choice of self-serving 

recommendations 

Different extended 

coverage options 

Advisors are more likely to 

recommend the option that 

maximizes their commission 

Bigel (2000) Certified Financial 

Planners (CFP) 

and non-certified 

financial advisors 

Mail survey No explicit measure, 

but a measure of ethics 

Comparison of the 

results on the ethical 

questions 

Holding a professional title is 

linked to a higher level of 

ethics 

The form of compensation 

does not affect the level of 

ethics of planners 



Pilote et al. 

54 
 

Bluethgen et al. 

(2008) 

Independent 

financial advisors, 

title not specified 

Survey Choice of self-serving 

assets and the choice 

of actively managing 

portfolios 

Assets allocation Compensation structure and 

advisor’s rationality are the 

two most important predictors 

of the quality of advice 

provided to clients 

Bolton et al. 

(2007) 

Not applicable Analytical 

model 

Choice of self-serving 

recommendations 

Recommendation 

choice 

The more profit the financial 

institution can make by 

directing clients to a particular 

type of investment, the more 

tempted it will be to do so, 

even if this affects its 

credibility. 

Burke et al. 

(2015) 

Financial advisors, 

title not specified 

Literature 

review 

Not applicable Not applicable Financial advisors maximize 

their own interests at the 

expense of their clients' 

interests 

Chalmers & 

Reuter (2020) 

Brokers, title not 

specified 

Archival data 

with field 

experiment and 

online survey 

The conflict of interest 

of brokers is assumed 

Annual return and 

volatility of assets 

If a default option for a 

retirement plan exists and it is 

well designed, individuals are 

better off with it than with 

financial advice with a conflict 

of interest 

Advisors recommend assets 

with high commissions 

Chen & 

Richardson 

(2018) 

Participants acting 

as financial 

advisors 

Lab experiment Choice of self-serving 

recommendations 

Client’s monetary 

results minus the 

amount paid 

Advisors are more likely to 

recommend the option that 

maximizes their commission 

Chen & 

Richardson 

(2019) 

Participants acting 

as financial 

advisors 

Lab experiment Choice of self-serving 

recommendations 

Client’s monetary 

results 

Advisors are more likely to 

recommend the option that 

maximizes their commission 

Christoffersen et 

al. (2013) 

Mutual funds 

broker 

Archival data Choice of mutual funds 

with higher incentive 

The positive or negative 

flow to a mutual fund 

Commissions from mutual 

funds affect broker 

recommendations 

Cupach & 

Carson (2002) 

Insurance agents Mail survey Choice of self-serving 

recommendations 

Amount and type of 

insurance recommended 

The form of compensation for 

insurance agents does not 



Financial Services Review, 32(3) 
 

55 
 

affect their product 

recommendations 

Danilov et al. 

(2013) 

Bank employees  Lab experiment Choice of self-serving 

recommendations 

Different financial 

product options 

Advisors are more likely to 

recommend the option that 

maximizes their commission  

Group incentives amplified the 

effect 

Dvorak (2015) Financial advisory 

firms 

Archival data Choice of mutual funds 

with higher fees 

The variation in fees 

between the funds held 

in the retirement plan 

for their own employees 

and their clients 

The retirement plans for their 

clients and their employees are 

very similar, except that the 

clients have higher fees 

Finke (2013) Financial advisor, 

title not specified 

Literature 

review 

Not applicable Not applicable The positive contribution of the 

financial advisor could be 

negated by the presence of a 

conflict of interest between the 

advisor and the client 

Foerster et al. 

(2017) 

Financial advisor, 

title not specified 

Archival data No explicit measure Investors' portfolio of 

assets 

Clients' portfolio is an 

imperfect copy of their 

advisor's 

Clients pay 2.5% of the value 

of the portfolio annually to 

receive the same advice as all 

of the advisor's other clients 

Golec (1992) Financial advisor, 

title not specified 

Archival data Incentives provided by 

the mutual funds to the 

advisor 

Performance of the 

mutual funds 

Mutual funds with base fees 

and advisor incentives attract 

more investment and have 

better financial results 

Hackethal et al. 

(2012) 

Independent 

financial advisor 

and bank-related 

financial advisor, 

title not specified 

Archival data Incentive to do more 

trade 

Performance of the 

investment portfolio 

Clients with either type of 

advisor perform worse than 

those investing alone 

The portfolios of advised 

clients have more trades than 

those of clients investing alone 



Pilote et al. 

56 
 

Hackethal et al. 

(2010) 

Financial advisor, 

title not specified 

Archival data 

and phone 

survey 

Advisor’s willingness 

to initiate contact with 

clients 

Transaction volume and 

type of product 

acquired 

Based on financial advice, 

clients trade more and purchase 

more products, which benefits 

the bank 

Hoechle et al. 

(2017) 

Financial advisor, 

title not specified 

Archival data No explicit measure Comparison of the 

performance of 

advisory and non-

advisory trades with 

benchmarks 

Trades following the advisor's 

recommendations perform 

worse than independent trades 

and benchmarks 

The effect is worse when it is 

the advisor who initiates the 

contact for the client to trade 

Inderst & 

Ottaviani 

(2012b) 

Financial advisor, 

title not specified 

Analytical 

model 

Choice of self-serving 

recommendations 

Advice on which option 

to choose 

Commission-based 

compensation promotes the 

maximization of the advisor’s 

interests with naïve clients, but 

not with wary clients 

Jarratt et al. 

(2007) 

Wealth 

Management 

Advisor 

Analytical 

model 

Choice of self-serving 

recommendations 

Investment choices Advisors have a vested interest 

in finding a balance between 

maximizing their own short-

term interest and retaining the 

trust of clients so that they 

remain their clients 

Kingston & 

Weng (2014) 

Financial advisor, 

title not specified 

Analytical 

model 

Choice of self-serving 

assets allocation 

Assets allocation Advisors favorize their own 

interest by selecting growth-

maximizing assets when they 

receive a percentage of assets 

under management 

Krausz & 

Paroush (2002) 

Financial advisor, 

title not specified 

Analytical 

model 

Choice of self-serving 

recommendations 

Advice on which option 

to choose 

Advisor pushes the risky 

option, which is associated 

with a better return for himself, 

even if the client is risk-averse 

Lai (2016) Insurance agents, 

wealth managers, 

and independent 

financial advisors 

Mixed 

methodology  

Presence of incentives Not applicable Recommendations made by 

financial advisors are strongly 

affected by commissions, 

bonuses, and sales quotas 



Financial Services Review, 32(3) 
 

57 
 

Liu (2005) Financial advisor, 

title not specified 

Analytical 

model 

Choice of self-serving 

recommendations and 

efforts 

Clients’ return on 

investment 

Simply sharing the return on 

the investment fails to 

maximize the advisor's effort 

Mietzner & 

Molterer (2018) 

Bankers, title not 

specified 

Archival data Choice of self-serving 

recommendations 

Investment in a specific 

type of asset 

Commissions create a gap 

between the recommendations 

made by the advisor and those 

that would optimize the client's 

situation 

Mullainathan et 

al. (2012) 

Financial advisor, 

title not specified 

Field 

experiment 

(audit study) 

Choice of self-serving 

modifications to the 

initial portfolio 

Variation on the initial 

portfolio based on 

advice 

Advisors encourage the 

acquisition of funds with high 

fees and the multiplication of 

transactions 

Advisors are willing to 

accommodate client wishes 

when they coincide with their 

own interests, but try to reverse 

the situation when the client's 

vision does not favor their own 

interests 

Oehler & 

Kohlert (2009) 

Financial advisor 

working in a bank, 

title not specified 

Field 

experiment 

(audit study) 

Choice of self-serving 

recommendations 

Variation of advisors’ 

recommendations  

Advice provided by the advisor 

is of higher quality when the 

client is more financially 

literate 

The information provided by 

the advisor to the client is 

generally of low quality 

Stoughton et al. 

(2011) 

Financial advisor, 

title not specified 

Analytical 

model 

Presence of kickbacks Clients’ wealth Kickbacks offered by portfolio 

managers to financial advisors 

negatively affect clients’ 

wealth 

Van Dijk et al. 

(2008) 

Insurance brokers Archival data 

and online 

survey 

Choice of self-serving 

recommendations 

The return on 

investment of the life 

insurance policy 

Insurance brokers do not 

generally recommend the best 

product to their clients 

 

Trust Theory 

 



Pilote et al. 

58 
 

Barnett White 

(2005) 

Participants acting 

as financial 

advisors 

Lab experiment A 7-point Likert scale 

question 

The decision to follow 

the recommendation 

Clients’ decision to follow the 

recommendation is based on 

the advisor’s ability in risky 

and non-emotional situations 

and on the advisor’s 

benevolence in risky and 

emotional situations 

Bhattacharya et 

al. (2012)  

Software-

generated advice 

Archival data 

with field 

experiment 

No explicit measure The decision to 

implement the 

recommendation 

Very few clients (about 5%) 

implement unsolicited 

recommendations 

The presence of unbiased 

advice is not enough to ensure 

that clients follow it 

Burke & Hung 

(2021) 

Financial advisors, 

different 

denominations 

Archival data A combination of 

multiple questions 

using Likert scale 

The under-

diversification of assets 

and the holding of risky 

assets 

Individuals who trust are more 

likely to get financial advice 

Individuals who trust hold 

more publicly traded stocks 

Unsolicited financial advice 

has no real impact on clients’ 

behavior 

Calcagno et al. 

(2017) 

Financial advisor, 

title not specified 

Archival data A 5-point Likert scale 

question 

The decision to delegate 

decision-making to the 

advisor 

Clients who trust more their 

advisor are more likely to 

completely delegate financial 

decision-making 

Deng & Liu 

(2017) 

Financial advisor 

in a broad sense 

Analytical 

model 

Represented by a 

variable in the model 

The portfolio at the end 

of the period 

The more trust the client has in 

the advisor, the more inclined 

the client is to invest in the 

risky asset 

Engelmann et al. 

(2009) 

The expert 

providing advice 

is presented as a 

professor of 

economics 

Lab experiment Neural activity visible 

by fMRI during the 

decision-making 

The decision to follow 

the expert’s 

recommendation 

Access to expert advice leads 

participants to rely on the 

expert's opinion and to offload 

the mental burden of decision-

making 

Eriksson & 

Hermansson 

(2019) 

Financial advisor 

working in a bank, 

title not specified 

Online survey A combination of two 

questions 

Financial assets 

purchased from the 

bank and monthly flow 

The length of the relationship 

with the advisor, the 

environment and the trust 



Financial Services Review, 32(3) 
 

59 
 

invested in mutual 

funds 

placed in the advisor positively 

affect the total assets held by 

the client with the bank as well 

as the amounts invested 

monthly in mutual funds 

Gennaioli et al. 

(2015) 

Financial advisor 

in a broad sense 

Analytical 

model 

Represented by a 

variable in the model 

The portfolio at the end 

of the period 

The more trust the client has in 

the advisor, the more likely 

they are to completely delegate 

the process 

Georgarakos & 

Inderst (2014) 

Financial advisor, 

title not specified 

Archival data 

and analytical 

model 

A dichotomous 

question 

The decision to invest 

in the stock market 

The more clients trust their 

advisor, the more likely they 

are to follow their advisor's 

recommendations for 

participating in the stock 

market 

Gurun et al. 

(2018) 

Registered 

investment advisor 

Archival data Comparison of the 

decision to move their 

assets to a checking 

account 

The decision to 

continue the 

relationship with the 

advisor 

Clients who have been affected 

by financial fraud stop doing 

business with the advisor who 

suggested the investment 

Johnson & 

Grayson (2005) 

Financial advisor, 

title not specified 

Mail survey Cognitive and affective 

trust are both based on 

five questions 

The value of sales per 

account and the number 

of different products 

owns by the client 

Clients who trust more their 

advisor are more likely to want 

to return to them in the future 

Advisors who have more 

cognitive trust from their 

clients have better sales 

effectiveness 

Lachance & 

Tang (2012) 

Five types of 

financial advisor 

Archival data A 7-point Likert scale 

question 

Soliciting the services 

of a financial advisor 

Individuals who trust financial 

advisors more seek their 

services in all five areas 

Linnainmaa et 

al. (2018) 

Financial advisor, 

title not specified 

Archival data The length of client-

advisor relationship 

Participation in the 

stock market, i.e., 

holding risky assets 

The more clients trust their 

advisor, the more likely they 

are to follow their advisor's 

recommendations to participate 

in the stock market 

Clients who seek out an 

advisor participate more in the 



Pilote et al. 

60 
 

stock market and take more 

risk (30% more) in their 

investments 

Mackinger et al. 

(2017) 

Financial advisor, 

title not specified 

Survey A combination of five 

questions 

Willingness to 

cooperate with the 

advisor 

Trust in the advisor affects 

clients’ intention to cooperate 

under uncertainty 

Monti et al. 

(2014) 

Financial advisor, 

title not specified 

Interviews and 

survey 

A combination of four 

questions 

Clients’ indication on 

whether they would 

completely delegate 

Clients report that they 

delegate primarily because 

they trust their advisor and lack 

financial knowledge (77% say 

they delegate and trust their 

advisor) 

Pauls et al. 

(2016) 

Financial advisor, 

title not specified 

Archival data A dichotomous 

question 

The decision to follow 

the advisors’ 

recommendation 

The more trust the client has in 

the advisor, the more likely 

they are to follow the advisor's 

recommendations 

Stolper (2018) Software-

generated advice 

Archival data No explicit measure The decision to 

implement the 

recommendation 

Very few clients (8.8%) 

implement the 

recommendations within a year 

of receiving the advice 

The presence of unbiased 

advice is not enough to ensure 

that clients follow it 

Winchester & 

Huston (2017) 

Financial services 

professional, title 

not specified 

Survey Clients’ willingness to 

recommend the advisor 

to someone else 

The value of financial 

advice after cost 

Trust in the advisor increases 

the value of consulting an 

advisor by reducing the costs 

associated with the client's 

control of the advisor. 

When the client has more trust, 

they control less 

Concept of Knowledge 

 

Azamian et al. 

(2022) 

Financial advisor, 

63% of the 

respondents are 

Online survey No explicit measure, 

but advisors are 

considered as 

professional in 

Debt, retirement plan, 

investment, estate plan, 

and cash flow 

The financial advisor group is 

better prepared for retirement, 

has less debt, has more 

liquidity, is better insured and 



Financial Services Review, 32(3) 
 

61 
 

Certified Financial 

Planners (CFP) 

comparison with the 

general population 

is more likely to have an estate 

plan 

Barrick & 

Spilker (2003) 

Tax specialists Lab experiment A combination of eight 

questions on the topic 

The information 

collected by the 

participants are 

compared with those of 

an experts’ panel 

Problem-specific knowledge 

positively and directly 

(indirectly, via the search 

strategy) affects information 

collection performance in the 

presence (absence) of 

collecting assistance 

Bergstresser et 

al. (2009) 

Mutual funds 

broker 

Archival data No explicit measure, 

but brokers are 

considered as 

professional in 

comparison to their 

clients 

The performance of 

mutual funds sold or 

acquired through a 

broker or directly by the 

client 

Mutual funds purchased 

through a broker perform 

worse than those purchased 

directly by the client 

Results could be explained by 

the conflict of interest between 

the broker and the client 

Bluethgen et al. 

(2008) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Diversification of assets 

in the clients’ portfolio 

Advisory-assisted clients have 

better portfolio diversification 

Clients who receive advice 

trade more and therefore have 

higher transaction costs 

Bodnaruk & 

Simonov (2015) 

Mutual fund 

managers 

Archival data No explicit measure, 

but managers are 

considered as 

professional in 

comparison to their 

clients 

Comparison of the 

results of mutual fund 

managers with those of 

individuals 

Mutual fund managers are no 

better than individuals when it 

comes to their personal 

investments 

Chatterjee & 

Fan (2023) 

Financial advisor 

and CFP 

Archival data No explicit measure, 

but the presence of a 

professional is 

considered 

Retirement savings, 6 

components 

People living in financial 

advice deserts are less likely to 

have retirement accounts and 

to contribute regularly to their 

retirement accounts 

Cici et al. (2017) Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

The change in equity 

ownership in the funds 

Financial advisors provide 

tangible benefits to investors, 



Pilote et al. 

62 
 

professional in 

comparison to their 

clients 

before and after a tax 

distribution 

particularly with respect to 

taxation 

Cloyd (1995) Tax specialists Lab experiment A combination of 

eighteen questions on 

the topic 

The information 

collected by the 

participants are 

compared with those of 

an experts’ panel 

Prior knowledge positively 

affects the number of relevant 

items found, the ability to 

differentiate between relevant 

and irrelevant items, and 

reduces the amount of time 

needed to complete the 

information search 

Cloyd (1997) Tax specialists Lab experiment A combination of 

eighteen questions on 

the topic 

The information 

collected by the 

participants are 

compared with those of 

an experts’ panel 

Prior knowledge positively 

affects the number of relevant 

items found 

Cummings et al. 

(2013) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

advisor is considered a 

positive influx of 

knowledge 

Holding an individual 

tax-free account (ROTH 

IRA) 

Solicitation of a financial 

planner positively influences 

ownership of an individual tax-

free account 

Direr & Visser 

(2013) 

Financial advisor, 

title not specified 

Archival data The holding of a 

university degree 

The percentage of 

assets invested in the 

stock market in relation 

to total assets 

Individuals who consult with 

financial advisors with higher 

levels of education are more 

likely to invest in the stock 

market than clients of those 

with lower levels of education 

Fan (2021) Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

advisor is considered a 

positive influx of 

knowledge 

Saving behaviors and 

credit usage 

Individual's search for 

information and the external 

search for information 

(financial advisor) are 

positively associated with 

saving and good credit usage 

Fischer & 

Gerhardt (2007) 

Financial advisor, 

title not specified 

Analytical 

model 

No explicit measure, 

but advisors are 

considered as 

The extent of 

investment errors made 

by individuals 

Financial advice helps 

individuals reduce their 

investment mistakes 



Financial Services Review, 32(3) 
 

63 
 

professional in 

comparison to their 

clients 

Grable & 

Chatterjee 

(2014) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

advisor is considered 

an added value 

Wealth change Individuals who sought a 

financial advisor experienced a 

6.25% lower loss of wealth as 

a result of a recession 

compared to those who did not 

seek an advisor 

Hanna & 

Lindamood 

(2010) 

Unspecified Analytical 

model 

No explicit measure No explicit measure The value of advice increases 

the more of the client's wealth 

may be lost, i.e., wealth 

volatility 

Hershey et al. 

(1990) 

Financial planning 

professional, title 

not specified 

Lab experiment A combination of a 

ten-page test and 

professional functions 

The type of information 

requested and the 

spoken process 

Experts solved the problem in 

less time and in fewer steps 

than novices 

Experts have a more structured 

resolution process than novices 

Experts select more relevant 

information than novices 

Hershey & 

Walsh (2000) 

Accountants and 

financial planners 

Lab experiment A combination of 

thirty-two questions on 

the topic 

The deviation between 

the participants’ 

solutions and those of 

an experts’ panel 

Individuals with specialized 

knowledge select more 

relevant information than those 

with general knowledge, who 

still select more relevant 

information than naïve 

individuals 

Individuals with specialized 

knowledge deviate less from 

the experts’ solution than those 

with general knowledge, who 

still perform better than naïve 

individuals 

Horn et al. 

(2009) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

The composition of the 

asset portfolio 

Investors who seek out a 

financial advisor make better 

investment choices 



Pilote et al. 

64 
 

professional in 

comparison to their 

clients 

Hudson & 

Palmer (2014) 

Financial advisor 

in a broad sense 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

A combination of ten 

questions on financial 

behaviors 

Low-income individuals who 

seek out a financial advisor 

have better savings behaviors 

and better budget management 

Hung & Yoong 

(2013) 

Financial advisor, 

title not specified 

Lab experiment 

and archival 

data 

No explicit measure, 

but the presence of an 

advisor is considered 

an added value 

The choice of asset 

allocation 

Respondents who seek 

financial advice perform better 

than those who do not seek 

advice 

Unsolicited financial advice is 

not followed by participants in 

the experiment 

Kramer (2012) Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

The performance of the 

asset portfolio 

There is no difference in risk-

adjusted performance between 

individuals investing alone or 

with an advisor 

The asset portfolio of clients 

seeking an advisor is better 

diversified 

Liu et al. (2019) Financial advisor 

in a broad sense 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Annual investment, 

financial asset holdings 

and total assets 

Individuals who receive 

financial advice hold more 

financial assets 

Marsden et al. 

(2011) 

Financial advisor, 

title not specified 

Online survey No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Having established 

long-term financial 

goals, calculating the 

amount needed for 

retirement or having an 

emergency fund 

Respondents who consult a 

financial advisor have better 

financial habits 



Financial Services Review, 32(3) 
 

65 
 

Martin & Finke 

(2014) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Wealth accumulated for 

retirement 

Individuals who seek the help 

of a financial planner and 

follow a comprehensive 

retirement plan are building 

greater wealth for retirement 

Montmarquette 

& Viennot-Briot 

(2015) 

Financial advisor, 

title not specified 

Online survey No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Assets held Individuals with a financial 

advisor for a minimum of four 

years have more financial 

assets than those without an 

advisor 

The influence of the financial 

advisor is primarily through 

improved client savings 

practices 

Montmarquette 

& Viennot-Briot 

(2019) 

Financial advisor, 

title not specified 

Online survey No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Assets held For the period from 2009 to 

2013, individuals who retained 

their financial advisor saw the 

value of their assets grow by 

16.4%, while the value of 

assets for those who left their 

advisor grew by 1.7% for the 

same period. 

Moreland (2018) Financial advisor 

in a broad sense 

Archival data No explicit measure, 

but the presence of an 

advisor is considered 

an added value 

Financial behaviors Individuals who consult a 

financial advisor have better 

financial behaviors, such as 

holding a savings account or 

paying their credit card on time 

and in full 

Mountain et al. 

(2021) 

Financial advisor, 

title not specified 

Online survey No explicit measure, 

but the presence of an 

advisor is considered 

as a source of learning 

Financial behaviors Individuals who consult a 

financial advisor have better 

financial behaviors 

Pan et al. (2020) Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

Participation in the 

stock market 

Financial advice affects stock 

market participation for 

individuals with high financial 



Pilote et al. 

66 
 

advisor is considered 

an added value 

literacy and a preference for 

diversification 

Park & Yao 

(2016) 

Financial advisor 

in a broad sense 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

Attitude to risk and 

asset ownership 

Individuals who use a financial 

planner are more consistent in 

their risk taking and financial 

behaviors 

Shapira & 

Venezia (2001) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

advisor is considered a 

positive influx of 

knowledge 

Timing of transactions, 

transaction volume and 

yield 

Clients investing with an 

advisor make more trades than 

those investing alone 

Clients investing with an 

advisor earn a higher return 

before commissions than those 

investing alone 

Smith et al. 

(2012) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but the presence of an 

advisor is considered a 

positive influx of 

knowledge 

Holding an individual 

tax-free account (ROTH 

IRA) 

Individuals with a financial 

advisor or higher level of 

financial literacy are more 

likely to hold an individual tax-

free account 

Spilker (1995) Tax specialists Lab experiment A combination of ten 

questions on the topic 

The keywords selected 

by the participants are 

compared with those of 

an experts’ panel 

Knowledge positively affects 

the number of relevant 

keywords selected  

The procedural group selects 

the most relevant keywords, 

followed by the declarative 

group and finally the naive 

group 

Von Gaudecker 

(2015) 

Financial advisor, 

title not specified 

Archival data No explicit measure, 

but advisors are 

considered as 

professional in 

comparison to their 

clients 

The cost of under-

diversification of assets 

Individuals who do not consult 

a financial advisor or who do 

not have a high level of 

financial literacy are at the 

greatest risk of experiencing 

losses related to asset under-

diversification 



Financial Services Review, 32(3) 
 

67 
 

Winchester & 

Huston (2014) 

Financial advisor, 

title not specified 

Survey No explicit measure, 

but advice comes from 

experts 

The progress 

individuals felt they had 

made in achieving their 

financial goal 

An ongoing relationship with a 

financial advisor improves the 

financial goal attainment of 

individuals who perceive 

themselves to be less in control 

Winchester & 

Huston (2015) 

Financial advisor, 

title not specified 

Survey No explicit measure, 

but advice comes from 

experts 

Individuals rate their 

performance in 

accumulating wealth, 

preventing losses, and 

smoothing consumption 

Middle-class individuals who 

receive integrated financial 

advice are 3 times more ready 

for retirement, 2 times more 

able to use their benefits, and 

nearly 2 times more likely to 

have an emergency fund 

Winchester et al. 

(2011) 

Financial advisor, 

title not specified 

Survey No explicit measure, 

but advice comes from 

experts 

Long-term commitment 

to a financial goal 

Individuals who consult a 

financial advisor have a greater 

long-term commitment to their 

financial goals, i.e., they 

rebalance their portfolio more 

Zhang (2014) Authorized 

Financial Adviser 

(AFA) 

Archival data No explicit measure, 

but advice comes from 

experts 

Annual return on 

investment and asset 

allocation 

The return on investment of 

individuals receiving financial 

advice is not significantly 

higher than that of individuals 

investing alone 

Individuals receiving financial 

advice hold more risky assets 

(stocks and property) than 

individuals investing alone