Abstract
Using FINRA’s 2012 National Financial Capability Study, this paper finds evidence of a causal relation between seeking professional financial advice and exhibiting positive financial behaviors. However, the effect of advice on behavior varies depending on the type of financial advice, the relevance of advice to particular behaviors, and the conditions of consuming this credence good. Advice about savings / investment shows the most consistent influence on financial behaviors because it affects positively establishing an emergency fund, calculating needed savings for retirement, and investing in financial securities, while affects negatively having a high level of debt. On the other hand, debt counseling has been found to affect positively the accumulation of debt and negatively the avoidance of payday loans, while insurance advice affects negatively investing in financial securities. Professional financial advice does not necessarily guarantee positive outcomes due to other factors that may influence this complex agency relationship.
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