The Rational Reminder Podcast

Episode 278: Juhani Linnainmaa: Financial Advisors, and the Cross-Section of Returns

20 snips
Nov 9, 2023
The podcast discusses the impact of financial advisors' portfolios on their clients' portfolios, the factors that determine variation in investment portfolios, the role of financial advisors in influencing equity market participation, the impact of increasing regulation on consumers and the positive effect of charlatans, the influence of data quality on investment factors, and the implications of pursuing momentum as a strategy.
Ask episode
AI Snips
Chapters
Transcript
Episode notes
INSIGHT

Trust Builds Equity Commitment Over Time

  • Longer advisor-client relationships build trust and raise equity allocation over time, sometimes by ~30 percentage points over a decade.
  • Clients with long-term advisors are also more likely to stay invested through crises.
INSIGHT

New Advisors Correlate With Crisis Capitulation

  • Clients who had a new advisor entering the 2008 crisis were ~8 percentage points more likely to sell out of equities.
  • Established advisor relationships materially reduce panic-driven liquidation during market shocks.
INSIGHT

Anomalies Weaken In Pre-1963 Data

  • Accounting-based anomalies (value, profitability, investment) are about half as strong in pre-1963 data as in the post-1963 sample.
  • This attenuation suggests many anomalies were inflated by data mining in the modern sample.
Get the Snipd Podcast app to discover more snips from this episode
Get the app