Professor Susan Thorp says that almost half of all Australians suffer from poor levels of financial literacy, resulting in many turning to financial advisers for help with decisions superannuation and other investments. Professor Thorp and a team of researchers sought to understand how people make financial decisions by unpacking the process through which trust is formed between clients and advisers.
The cross-university research project involved producing a series of videos in which a number of advisers offered good financial advice while others provided poor advice. The videos were then shown to groups of people who were asked to identify which of the advisers they would trust.
The research found that trust in the advisers was easily manipulated, and Professor Thorp believes this indicates a need for higher qualifications and standards for financial advisers, as well as the advisery industry and regulators such as the Australian Securities and Investments Commission to enforce laws protecting consumers more rigorously.
Working with Professor Thorp on the research project were Professor Julie Agnew of the College of William and Mary, Virginia, United States; University of NSW Professor Hazel Bateman; Dr Christine Eckert of UTS Business School; the Australian National University's Dr Fedor Iskhakov; and Professor Jordan Louviere of the University of South Australia.
Agnew J, Bateman H, Eckert C, Iskhakov F, Louviere J and Thorp S 2016 'First Impressions Matter: An Experimental Investigation of Online Financial Advice', Management Science
Bateman H, Geweke J, Louviere J, Eckert C, Satchell S and Thorp S, 2016 Risk Presentation and Portfolio Choice, Review of Finance, vol.20:1, pp. 201-29
Bateman H, Dobrescu LI, Newell BR, Ortmann A and Thorp S 2016 As easy as pie: How retirement savers use prescribed investment disclosures, Journal of Economic Behavior and Organization, vol.121, pp. 60-76
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