What is it about?
The research found that financial advisors were likely to suppress disclosures as this increased the likelihood of a desirable contract being offered, and therefore a commission paid to the advisor.
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Why is it important?
This is strong evidence of the powerful role that financial incentives play in information asymmetries.
Perspectives
This research is in keeping with the findings of a number of enquiries that have expressed concern about both financial advisors and the potential of incentives to work against customer interests. In this case, incorrect disclosures could lead to an unreliable contract.
Doron Samuell
University of Sydney
Read the Original
This page is a summary of: The adviser effect on insurance disclosures, Applied Economics, August 2019, Taylor & Francis,
DOI: 10.1080/00036846.2019.1646883.
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