Researchers at the Said Business School at Oxford University have analysed the $2.5 billion US advice market and found evidence of strong influence on investment decisions.
Having analysed the work of 29 “investment consultancy” firms that operated 90 per cent of the US advice market between 1999 to 2011, the report found that adviser recommendation had a significant impact on institutional fund flows. “Using survey data, we analyse what drives consultants’ recommendations of institutional funds, what impact these recommendations have on flows, and how much value they add to plan sponsors,” the report stated.“We find that consultants’ recommendations of funds are driven largely by soft factors, rather than the funds’ past performance, and that their recommendations have a very significant effect on fund flows, but we find no evidence that these recommendations add value to plan sponsors.”
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