|Andreas Hackethal, Benjamin Loos, Steffen Meyer, Charline Uhr
|Think Forward Initiative
Topic & Objectives
Using a field experiment at a German online brokerage, we investigate the effects of a flat-fee scheme versus a commission-based scheme for investments in mutual funds on the behaviour and outcomes of advised individual investors. In a difference-in-differences setting, we compare 699 clients that switched to the flat-fee scheme to one-on-one propensity-score-matched clients in the commission-based scheme. Flat fee switchers respond by improving portfolio efficiency through higher fund shares. Efficiency gains are not driven by potential cost savings for trading and holding mutual funds but by seeking and following financial advice more often. We find evidence that flat rates enhance the perceived quality of financial advice.