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Finance Research Letters

Presentation by

5th September, 2025

Table of Contents
• Introduction
• Research Structure
• Research Methodology
• Research Main Results
• Research Interesting points
• Research’s important recommendation
• Conclusion
Introduction

This study explicates the role of behavioral bias in financial advice seeking. Investors with behavioral
biases are prone to making poor financial decisions, which advisors may help to eradicate. Drawing on
Research an online survey of experienced individual investors, this study examines how behavioral bias affects
Overview financial advice seeking.

The three biases identified in this study influence advice seeking differently: overconfident investors
Purpose of the tend to invest by themselves, while investors with self protection bias and/or mental accounting bias
Research are more likely to seek financial advice. The pedagogical implication is to address these biases to
the public in financial literacy initiatives.

Group member
 Research Structure
Data and Results and Conclusion
Methodology Table 1: Summary statistics. 1.Suggest that financial literacy
discussions
1. Sample selection Table 2: Descriptive statistics on initiatives should be launched to
2. Demand for financial advice the demand for financial advice, address behavioral biases in
3. Behavioral biases financial literacy, and behavioral investment.
4. Financial literacy biases 2. Different types of behavioral
Table 3: Demand for financial biases may affect the demand for
advice and behavioral biases. advice differently, learning to be
Table 4: Demand for financial aware of biases and training to
advice with or without intention. avoid specific biases are necessary
to make appropriate financial
decisions
 Research Methodology
Sample selection Demand for financial
The dataset was generated The main dependent variable was the extent of financial advice
by an online survey of 1,331 advice
seeking.To avoid estimation difficulties and false inferences that could
individuals aged 18 years result from the selection of too few observations, the study excluded
and above who had participants who were willing to delegate most or all of their decisions to
experience in trading stock their advisors. As a result, the dependent variable has three categories:
during the previous year.The Di =1: investors decide completely by themselves, and the advisor simply
participants in the survey executes their decisions;
were recruited from a pool Di =2: investors inform the advisor how they intend to invest and ask their
of individuals provided by opinion before deciding;
Pollster, a professional Di =3: investors consider their advisor’s proposals before deciding.
market research firm that Dependent variable used in the analysis is defined as a self-decision if
has experience in Di = 1 (self-investment), and advice if Di =2 or Di =3 (financial advice).
conducting surveys on An alternative definition is proposed as a robustness check and further
financial topics. separates advice into two groups: advice with Intention (Di =2) and
advice without intention (Di = 3).
 Research Methodology
Self-attribution bias can be separated into two
Behavioral components: self enhancement and self-
This study employs questionnaires to evaluate individuals’s protection. The former refers to the attribution
biases self-attribution bias,
behavioral biases, such as overconfidence, of past successes; the latter, to the contrary,
and mental accounting bias. Overconfident individuals believe they refers to the attribution of past failures. The
are better at a variety of skills than they actually are. In investing, it survey question was asked under the
can create problems such as excess trading, under-diversification, condition of a losing investment.
and taking more risk, this study purposely adopts measurement Mental accounting theory refers to how
due to its statistical significance and effectiveness. people use mental accounts to categorize,
assess, and keep track of financial activities.
Individuals attribute value based on which
category the money falls into and make
decisions based on each mental account
separately. As a result, they fail to consider
the big picture, and this leads to irrational
decision-making
 Research Methodology

Financial
Financial competence may help investors
literacy The financial literacy measure
avoid irrational investments. Individual was constructed based on
Calcagno and Monticone
investors are more competent when they (2015) and matched the
number of correct answers to
have high financial literacy, which is questions on inflation, interest,
positively associated with a well-diversified an understanding of
diversification, and the risks
portfolio and a wealthy lifestyle associated with various
financial products. Accordingly,
financial literacy in this study is
comprised of four
components: inflation, interest,
diversification and risk.
Research’s important
recommendation
This study does not suggest the causality among these surveyed variables.
While acknowledging the proof of causality requires an experimental design,
this study nevertheless yields an industrial implication for expanding these
consulting services: those exhibiting self-protection and mental accounting
biases and less confident investors might be suitable target consumers.

The effect of behavioral bias is in line with the expectation that overconfidence
shows a strong negative relationship with advice seeking, while self-protection bias
and mental accounting bias show strong positive effects on consulting advice.
Overconfidence might prevent individuals from seeking financial advice. Individuals
who are more confident in their own financial literacy are less likely to seek financial
advice

This study finds that financial advice services may not benefit those who need
them most. The results suggest that financial literacy initiatives should be
launched to address behavioral biases in investment
 Ingoude Company

Conclusion
Thank You
for your attention

5th September, 2024