Abstract
This article deals with the interaction between commission remuneration of independent financial advisers and selected sales factors, including the quality of advice. Utilizing data on investment transactions and a linear model with mixed effects, we have found that the link between commission and quality of the subsequent recommendation is not homogeneous, and advice-bias potential is present only in a limited range of organizational environments, connected mainly to the flat-structure business model. On the other hand, arbitrage between different product classes was found to create a biasing potential across almost all types of firms, creating potential for market systemic risk. Finally, the effect of information provided was proved to be significant only to a very limited extent. © 2017 Academy of Financial Services.
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