Social Financial Advice

Abstract

People often cite family and friends as important sources of financial advice. We study the impact of this social financial advice by using comprehensive administrative data on social networks and an identification strategy leveraging job switches to financial advisor roles. Gaining access to social financial advice significantly increases stock market participation. This effect declines in social distance, persists across socioeconomic groups, is absent for safe assets, and does not extend to other finance professionals. Our results are consistent with complementarity of investment expertise with client-facing skills being essential for advisors to successfully convert their social connections into investors.

Keywords

Tags of Social Finance