151 PagesPosted: 19 Jul 2021Last revised: 10 Jun 2023
See all articles by Marten Laudi
Marten Laudi
University of Bremen - Faculty of Business Studies and Economics
Paul Smeets
University of Amsterdam
Utz Weitzel
VU University Amsterdam
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Do Financial Advisors Charge Sustainable Investors a Premium?
Number of pages: 151Posted: 19 Jul 2021Last Revised: 10 Jun 2023
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Do Financial Advisors Exploit Responsible Investment Preferences?
Tinbergen Institute Discussion Paper 2021-070/IV
Number of pages: 96Posted: 22 Jul 2021
Downloads 176
Date Written: June 9, 2022
Abstract
Despite growing concerns from regulators about potential price discrimination against
sustainable investors, empirical evidence is lacking. To address this gap, we conduct two
lab-in-the-field experiments with 415 professional financial advisors from the US and Europe.
Our results show that these advisors impose a premium on sustainable investors
compared to conventional investors. This premium persists even when differences in
effort, skill, and costs, as well as higher gains from trade are ruled out. Notably, advisors
charge the highest fees to sustainable investors with low financial literacy, while
sustainable investors with high financial literacy pay no premium at all. These results
are consistent with price discrimination. Financial regulators evaluate our results and
provide policy implications.
Keywords: Experimental Finance, Financial Advice, Sustainable Investing, Financial Literacy
JEL Classification: C93, G11
Suggested Citation:Suggested Citation
Laudi, Marten and Smeets, Paul and Weitzel, Utz, Do Financial Advisors Charge Sustainable Investors a Premium? (June 9, 2022). Available at SSRN: https://ssrn.com/abstract=3887716 or http://dx.doi.org/10.2139/ssrn.3887716
Marten Laudi
University of Bremen - Faculty of Business Studies and Economics ( email )
Bremen, D-28359
Germany
HOME PAGE: http://martenlaudi.com
Paul Smeets (Contact Author)
University of Amsterdam ( email )
Plantage Muidergracht 12
Amsterdam, 1018TV
Netherlands
Utz Weitzel
VU University Amsterdam ( email )
De Boelelaan 1105
Amsterdam
Netherlands
