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Financial Advisory Services: Exploring relationships between consumers and financial advisors
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.ORCID iD: 0000-0003-4394-4020
2013 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The need for more knowledge about different aspects of financial advisory services has been highlighted by scholars of many disciplines, and calls for more in-depth studies of this practice have been put forward. The purpose of this thesis is to answer this call and, thereby, enhance knowledge about financial advisory services and the provision and receipt of advice occurring in a face-to-face encounter between a professional advisor and a consumer. The thesis consists of five papers in which different methodological and theoretical lenses are applied to the study of the practice. A mixed methods approach is applied to the object of study—financial advisory services. This approach entails using qualitative methods to analyze video-recorded interviews and quantitative methods to analyze survey data. The qualitative methods are used primarily to generate new constructs and ideas, whereas quantitative methods are used more to confirm and deepen the knowledge of constructs and relationships.

The findings show that there are important aspects of financial advisory services that have been previously neglected. The characteristics of both consumers and advisors, as tested from the aspect of gender, are shown to have importance for both consumer and advisor perceptions of different aspects of core elements of financial advisory services. Focusing on the micro-foundations of the relationship between customer and advisor in financial advisory services reveals the importance of mirroring for customers in perceiving a relationship. Two types of interactions that customers do not consider to be relationships are identified. Scholars have referred to occasions in which customers are too trusting as “the dark side of trust”, meaning that the customer becomes less actively involved in the relationship with increasing advisor trust.  Applying a concept borrowed from psychotherapy—working alliance—has opened up possibilities for further exploration of the inner workings of the financial advisory session. This thesis proposes and tests the concept of a working alliance as a way of enhancing theory and, thereby, the understanding of relationships between consumers and service providers.

The results of this thesis have implications for theory by contributing to the understanding of relationships. The implications for policymakers, the industry, and advisors and customers are many. Exploring the practice of financial advisory services lays the groundwork for discussions on, and elaborations of, regulations, educational programs, and hiring practices within the industry, as well as on financial literacy programs directed toward consumers.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2013. , 114 p.
Series
TRITA/KTH/CEFIN-DT, ISSN 1654-9376 ; 07
Keyword [en]
financial advice, conusmer finance, financial services, financial decisioin making, risk perception, relationship, working alliance
National Category
Business Administration
Identifiers
URN: urn:nbn:se:kth:diva-116207OAI: oai:DiVA.org:kth-116207DiVA: diva2:589098
Public defence
2013-01-25, D1, Lindstedtsvägen 17, KTH, Stockholm, 14:00 (Swedish)
Opponent
Supervisors
Note

QC 20130117

Available from: 2013-01-17 Created: 2013-01-16 Last updated: 2013-01-18Bibliographically approved
List of papers
1. Customers ’ ways of making sense of a financial service relationship through intersubjective mirroring of others
Open this publication in new window or tab >>Customers ’ ways of making sense of a financial service relationship through intersubjective mirroring of others
2010 (English)In: Journal of Financial Services Marketing, ISSN 1363-0539, E-ISSN 1479-1846, Vol. 15, no 2, 99-111 p.Article in journal (Refereed) Published
Abstract [en]

The importance of relationships between buyer and sellers in marketingresearch is well established. This study contributes to relationship marketing (RM)research as it examines the microfoundations of fi nancial service buyer and sellerrelationships. The study uses intersubjective theory and a qualitative method with thepurpose of conceptualising the qualitatively different ways customers experience faceto-face interactions with a service provider. An empirical study is conducted to determine,based on the customer ’ s own words, what is experienced in the interaction between thecustomer and the provider. Findings from the empirical material show that not all personalinteractions between customers and a service provider, in this case a bank, can belabelled as relationships. Instead, what customers do perceive as a relationship is anencounter where the interaction entails symmetry in the way the customer and the providermirror each other. When customers receive a treatment in opposition to an expectationof intersubjectivity, they will not refer to the situation as a relationship and, subsequently,according to the underlying assumptions of RM, do not willingly engage in further businesswith the provider.

Place, publisher, year, edition, pages
Palgrave Macmillan, 2010
Keyword
customers ; intersubjectivity ; relationship ; relationship marketing ; retail banking ; service provider
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-73975 (URN)10.1057/fsm.2010.8 (DOI)2-s2.0-77956358849 (Scopus ID)
Note
QC 20120210Available from: 2012-02-10 Created: 2012-02-02 Last updated: 2017-12-08Bibliographically approved
2. The dark side of trust and the light side of working alliances in financial services
Open this publication in new window or tab >>The dark side of trust and the light side of working alliances in financial services
2014 (English)In: International Journal of Bank Marketing, ISSN 0265-2323, E-ISSN 1758-5937, Vol. 32, no 3, 245-263 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to use psychological theory to improve our understanding of financial advice-taking. The paper studies how a working alliance between financial service customers and advisors affects the advisor's assessment of the financial service buyer's perceived risk preferences, and what role trust plays as a mediating variable. Design/methodology/approach: The paper obtained data by means of a questionnaire that was answered by 375 matched pairs of bank advisors and customers. Findings: This paper explains how the working alliance method - a concept from psychotherapeutic theory - between financial service customers and advisors affects the advisor's understanding of the financial service buyer's perceived risk preferences. The paper also finds that the role of trust is perceived differently by the advisor and the customer. Advisors see that as their clients learn to trust them they lose touch with the customer's perceived risk preferences, whereas customers do not perceive that their trust in the advisor has any relationship to their risk preferences. Practical implications: This results suggest that advisors lose touch with the risk preferences of trusting customers, and that psychological methods are needed if the advisor should actually understand customer perceived risk preferences. Originality/value: The paper advances psychological methods in marketing, and provides a partial answer to the difficulties of financial advice giving.

Keyword
Banking, Marketing
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-116371 (URN)10.1108/IJBM-02-2013-0014 (DOI)2-s2.0-84897951989 (Scopus ID)
Note

QC 20150316. Updated from submitted to published.

Available from: 2013-01-17 Created: 2013-01-17 Last updated: 2017-12-06Bibliographically approved
3. Relationships Between Advisor Characteristics and Consumer Perceptions
Open this publication in new window or tab >>Relationships Between Advisor Characteristics and Consumer Perceptions
2013 (English)In: International Journal of Bank Marketing, ISSN 0265-2323, E-ISSN 1758-5937, Vol. 31, no 3, 147-166 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – This paper aims to investigate the relationships between advisor characteristics and consumer risk perception, willingness to follow advice and perception of advisor credibility in a financial services context. It answers calls for more knowledge about financial advisors’ influence on financial decision‐making among consumers.

Design/methodology/approach – An experimental study, displaying financial advice together with photographs of advisors, was completed by convenience sampling of 200 Swedish consumers and analysis using statistical techniques to compare groups: two‐way between‐groups ANOVA.

Findings – This study shows that advisor gender affected consumer risk perceptions, willingness to follow advice and perception of advisor credibility in a financial services context, whereas advisor mood affected only consumer willingness to follow advice. No biases depending on buyer–seller similarity were found.

Research limitations/implications – The study focuses on consumer perceptions – not real‐life investment choices. Conclusions are drawn from a relatively small sample. However, the policy implications are important, suggesting that characteristics other than those of consumers (e.g. gender, educational level, occupation, financial literacy) can be of relevance for policymakers in their attempts to improve consumer protection.

Practical implications – The findings provide useful insights for marketing practitioners that could help adjust information disseminated to consumer segments and that could have implications for marketing and hiring practices in the financial sector.

Originality/value – This paper illustrates the role of advisor characteristics in consumer financial decision‐making and calls for more research on financial advisory services.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2013
Keyword
Financial services, Consumer behaviour, Risk perception, Financial advice, Financial advisor, Lay consumer, Buyer seller relations, Sweden
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:kth:diva-116372 (URN)10.1108/02652321311315276 (DOI)2-s2.0-84875628672 (Scopus ID)
Note

QC 20160418

Available from: 2013-01-17 Created: 2013-01-17 Last updated: 2017-12-06Bibliographically approved
4. Gender stereotyping in financial advisors assessment of customers
Open this publication in new window or tab >>Gender stereotyping in financial advisors assessment of customers
2012 (English)In: Journal of Financial Services Marketing, ISSN 1363-0539, E-ISSN 1479-1846, Vol. 17, no 4, 259-272 p.Article in journal (Refereed) Published
Abstract [en]

This article presents the results of a comparison of male and female advisors assessment of their customers. The findings from the empirical material, consisting of 361 advisors answers to a questionnaire, show significant evidence that advisors assess their customers differently depending not only on customer gender, but also according to their own gender. The investigated variables are the advisors assessment of consumers perception of their own risk tolerance, customer satisfaction with the advisor, customer trust in the advisor, customer likelihood to follow the advice given and advisors ratings of customer financial literacy. Male advisors rated consumers answers higher than did their female colleagues for all variables, with the exception of advisors ratings of consumer financial literacy. Advisors and their employers in the financial services industry, as well as policymakers, should be aware of the possible association between advisor gender and potential gender stereotyping of clients.

Place, publisher, year, edition, pages
Palgrave Macmillan, 2012
Keyword
advisor, financial services, gendre, risk tolerance, overconfidence
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-111413 (URN)10.1057/fsm.2012.24 (DOI)2-s2.0-84871456403 (Scopus ID)
Note

QC 20130116

Available from: 2013-01-16 Created: 2013-01-11 Last updated: 2017-12-06Bibliographically approved
5. Lay actions in the face of crisis-Swedish citizens' actions in response to the global financial crisis of 2008
Open this publication in new window or tab >>Lay actions in the face of crisis-Swedish citizens' actions in response to the global financial crisis of 2008
2012 (English)In: The Journal of Socio-Economics, ISSN 1053-5357, E-ISSN 1879-1239, Vol. 41, no 6, 796-805 p.Article in journal (Refereed) Published
Abstract [en]

This study goes beyond attitudes and behavioral indications as response to risk perceptions and focuses on actual behavior of laypeople. We report the results from a survey, conducted among a sample of Swedish citizens in the spring of 2009, looking at lay actions as responses to the financial crisis of 2008. In total, 3138 respondents were asked whether they had done something to protect their money during the recent financial crisis or not. The total sample, 1053 respondents, was divided into two comparable groups and a binary logistic regression tested a model with nine factors hypothesized to be predicting the choice to act or not as a response to the financial crisis. Among the eight factors predicting likelihood to act were gender, age, education, ethnicity, possession of assets affected of the financial crisis, worrying about the everyday household finances, the perception of others' actions, and importance put on being knowledgeable and up-dated about financial matters. The ninth factor-respondents' perception of the crisis to be a greater threat to the U.S. and global economy than to their own personal finances-did not contribute significantly to the model.A second aim of the study was to determine whether any individuals acted rashly and, if so, whether this group differed in any statistically significant way from the group of individuals that acted in a more financially circumspectly manner. In the group of individuals that acted rashly there is a higher propensity of: individuals who do not think they have assets affected by the crisis: individuals who have a lower level of education; and individuals who consider it important to be knowledgeable and up-to-date about financial matters. It should be of interest to policymakers and researchers to further explore features of this group of laypeople because it is the most important target group for consumer information and protection.

Keyword
Action, Financial crisis, Laypeople, Logistic regression, Risk perception
National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-115489 (URN)10.1016/j.socec.2012.08.007 (DOI)2-s2.0-84871720759 (Scopus ID)
Note

QC 20130115

Available from: 2013-01-15 Created: 2013-01-15 Last updated: 2017-12-06Bibliographically approved

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