Do contracts influence comprehensive financial advice?
DOI:
https://doi.org/10.61190/fsr.v18i2.4943Keywords:
Life insurance, Agency theory, Financial planning, Financial adviceAbstract
Delegating management of financial decisions may involve both direct and agency costs. We hypothesize that contracting differences between financial planners and brokers may lead to differ ences in life insurance adequacy. Using nationally representative data, we estimate the impact of the use of planners and brokers on life insurance adequacy. Descriptive and multivariate analyses of insurance adequacy are consistent with the hypothesis that contracting matters. Those who rely primarily on financial planners are more likely to have adequate life insurance holdings. The use of brokers is not related to optimal levels of life insurance.
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