The Impact of Financial Advisors on the Subsequent Wealth of Older Adults - White Paper

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The Impact of Financial Advisors on the Subsequent Wealth of Older Adults (White Paper)

With a growing percentage of the population over the age of 60, more and more individuals are impacted by wealth distribution decisions. At the same time, more and more individuals are seeking professional advice to guide their financial decisions. Despite the growing use of financial advisors, relatively little is known about the impact that financial advisors have on actual wealth retention and consumption decisions among older adults. We seek to provide insight on this topic.

Financial advisors can have a significant impact on financial outcomes, including an impact on net worth in retirement, even long after professional advice was provided. When providing comprehensive financial advice, financial advisors may not only impact their clients’ net worth by influencing investment choices but also by advising clients about their rate of consumption, both of which impact lifetime utility. Because of client and advisor incentives, we hypothesize that otherwise similarly situated older adults with a financial advisor are more likely to experience greater wealth accumulation (or retention) over time.

Benjamin F. Cummings, Ph.D., CFP®
Russell N. James III, J.D., Ph.D., CFP®

Table of Contents:
Literature Review
Use and Value of Financial Advisors
Wealth Retention and Consumption Decisions
Wealth Age Relations
Impact of Financial Advisors on Subsequent Wealth
Empirical Model