Personal Recommendations and Portfolio Quality

Last registered on May 13, 2024

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Pre-Trial

Trial Information

General Information

Title

Personal Recommendations and Portfolio Quality

RCT ID

AEARCTR-0013567

Initial registration date

May 10, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

May 13, 2024, 12:40 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

Germany

Region

Primary Investigator

Name

Claes Bäckman

Affiliation

Leibniz Institute for Financial Research SAFE

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Tobin Hanspal

PI Affiliation

Department of Finance, Accounting, and Statistics, WU Vienna University of Business and Economics and Vienna Graduate School of Finance.

Contact Investigator

PI Name

Olga Balakina

PI Affiliation

Leibniz Institute for Financial Research SAFE

Contact Investigator

PI Name

Andreas Hackethal

PI Affiliation

Goethe University Frankfurt and Leibniz Institute for Financial Research SAFE

Contact Investigator

Additional Trial Information

Status

In development

Start date

2024-05-10

End date

2024-05-31

Keywords

Behavior, Finance & Microfinance

Additional Keywords

JEL code(s)

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

In this survey we are interested in personal financial advice about investments in stocks and funds. With personal advice, we refer to advice from your friends, acquaintances, colleagues, or family members about investments in stocks and funds. We will refer to this as family and friends. We define financial advice as providing or receiving opinions, suggestions, recommendations, or information related to financial matters, including how to invest or save, how to create wealth, or specifically which financial choices to make. The advice can be either in person or online.

Our goal is to understand what kind of personal financial advice individuals receive and what kind of personal financial advice individuals would give. We also want to understand who typically gives advice and who typically receives advice. Our main goal is to understand if individuals tend to recommend single stocks to their family and friends, or if they tend to recommend investing in funds. We also wish to understand the process of giving and receiving advice better.

External Link(s)

Registration Citation

Citation

Balakina, Olga et al. 2024. "Personal Recommendations and Portfolio Quality." AEA RCT Registry. May 13. https://doi.org/10.1257/rct.13567-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

We will randomly assign respondents to examples of financial advice and ask them to evaluate the advice on different criteria: how similar this advice is to what they would give themselves, ask how comfortable they would be to provide this advice, and ask how they perceive the riskiness and return on the advice.

Intervention Start Date

2024-05-10

Intervention End Date

2024-05-31

Primary Outcomes

Primary Outcomes (end points)

- The advice that investors receive from their family and friends
- What individuals look for in the person they receive advice from?
- The advice that investors give to their family and friends
- Primary Outcomes (Explanation)
- The characteristics of the person answering that they usually provide advice

Primary Outcomes (explanation)

Open ended questions:
Asking respondents to describe the advice that they have received from their family and friends
Asking respondents to describe the what they look for in the person they receive advice from
Asking respondents to describe what advice they would provide to their family and friends.

Survey questions:
How likely respondents are to recommend a) a single stock b) mutual funds
Whether respondents received advice to invest in a) a single stock b) mutual funds
Whether respondents would follow advice to invest in a) a single stock b) mutual funds

Experiment questions:
how comfortable individuals are with advice about either a single stock that has done well, or an investment in funds.

Characteristics of investors that usually provide advice: Correlates of dummy equal to one if the individual provides advice.

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

We randomly provide respondents with an example of advice concerning either investment in a single stock that has done well or investment into an globally diversified index fund. We vary the advice and the gender of the person providing advice.

Experimental Design Details

Randomization Method

The randomization is computerized in Qualtrics.

Randomization Unit

Individual

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

General population of German investors, aged 25+. Investors are defined as individuals who had investments in stocks, funds, ETFs, or certificates in the past three years. n = 1,000

Sample size: planned number of observations

2000

Sample size (or number of clusters) by treatment arms

Sample size (or number of clusters) by treatment arms
Treatment arms:
Providing advice: Invest in single stock vs invest in mutual funds x Male story vs Female story = 4 treatment arms.
Receiving advice: : Invest in single stock vs invest in mutual funds x Male story vs Female story = 4 treatment arms.

In total we have 8 conditions (4 each for providing and receiving advice). Condition is chosen randomly, after the individual selects into either giving or receiving advice. We plan to collect at least 100 observations for each treatment arm.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB