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1University of Konstanz, Germany; 2Copenhagen Business School, Denmark
Discussant: Alexander Klos (Christian-Albrechts-Universität zu Kiel)
Using a life-cycle model of household consumption and investment under family transitions, we investigate the long-run financial outcomes of divorces. We find divorce leads to a reduction in wealth, and the loss is larger for higher-educated women. Earlier fertility and a smaller parenthood penalty for women with only a high school diploma result in negative effects of divorces fading away by age 45, whereas for college-educated women, the same is achieved a decade later because of later fertility and a stronger parenthood penalty. Reduced economies of scale, switching to a single-person income, and losing wealth protection within marriage have the strongest impact on the divorced household economy.
9:30am - 10:00am
If I were you: Advisor gender and client risk tolerance
Dominik Scheld, Oscar Stolper
University of Marburg, Germany
Discussant: Marcel Fischer (University of Konstanz)
We examine how financial advisors shape the elicitation of clients’ investment risk tolerance. Using data from 7,180 in-person meetings, we find that risk tolerance varies systematically across advisors. Clients assigned to male advisors exhibit significantly higher risk tolerance than their demographic twins advised by female advisors. These differences affect product recommendations and client portfolios, as clients follow advice despite advisor-induced noise. The pattern is not driven by strategic manipulation but aligns with a false consensus effect—advisors projecting their preferences onto clients. Our findings highlight the persistent influence of advisor identity, even in regulated environments, raising important questions for policy and practice on the objectivity of risk profiling and the behavioral roots of investment advice.
10:00am - 10:30am
Gambling with Dividends
Alexander Klos1, Jan Müller-Dethard2, Niklas Reinhardt1, Martin Weber2
1Kiel University; 2University of Mannheim
Discussant: Dominik Scheld (University of Marburg)
Previous research suggests that many investors view dividends as free income. In this paper, we show that this fallacy can drive investors to play with the house money. First, using brokerage data, we document that investors use disproportionate fractions of dividends to buy lottery stocks and options. Second, using an experiment, we replicate the tendency to gamble with dividends in the lab and find that this tendency is stronger among participants suffering from the free dividends fallacy.
