The Gamma Factor and the Value of Financial Advice /

Against the first question (“What are the determinants of having a financial advisor?”), as expected, three relevant factors positively affect the probability of having a financial advisor: income level, the capacity of the household to save and the age of the respondent.3 Power Financial, CIRANO designed and conducted a follow-up survey focused on assessing the value of advice in June 2011 [...] By asking two specific questions to those respondents, we add a dynamic dimension to the study which is associated with the concept of the “survival principle”: 1) How does the asset value of households without a financial advisor in 2010 and in 2014 compare with households without a financial advisor in 2010 but with an advisor in 2014? [...] The standard deviation of the value of assets for advised households is relatively large in 2014.12 Figures 1 and 2 show the distribution of the value of assets respectively for 2010 and 2014 that would prompt a household to seek advice. [...] As expected, in both surveys15, the key factors that positively affect the probability of having a financial advisor are: income level, the capacity to save, post-secondary education, and age of respondent.16 In the 2010 survey, having some level of financial literacy positively affects the probability of having an advisor. [...] In Table 1, we presented the median, mean and standard deviation of the value of financial assets for the two categories of respondents for both surveys.19 The average value of assets for the non-advised decreased in 2014 relative to 2010.