Don't move my cheese: Financial advice adaptation to regulatory change

Menachem (Meni) Abudy; Ilan Gildin; Yevgeny Mugerman

doi:10.1016/j.frl.2024.105005

Don't move my cheese: Financial advice adaptation to regulatory change

School of Business Administration

The Israeli Securities Authority
Hebrew University of Jerusalem

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

This paper examines the impact of financial advisors on retail investor behavior in response to an Israeli regulation converting ETNs to ETFs. Our findings demonstrate that transactions influenced by financial advisors shifted from ETNs to index funds following the reform, while unadvised market participants’ tendencies did not change. This shift is attributed to the reform's cancellation of matched transactions, which changed the work routine for financial advisors. The results demonstrate that to be effectively implemented, financial reforms should consider their effect on market participants’ workflows.

Original language	English
Article number	105005
Journal	Finance Research Letters
Volume	61
DOIs	https://doi.org/10.1016/j.frl.2024.105005
State	Published - Mar 2024

Bibliographical note

Publisher Copyright:
© 2024 Elsevier Inc.

Funding

We thank the Israel Securities Authority for providing the data. The paper is the opinion of the authors only and does not represent the views of the Israel Securities Authority. The paper was presented at the 2023 special-theme conference on The Effectiveness of Financial Regulation hosted by the School of Economics at the College of Management Academic Studies, Israel. We thank Beni Lauterbach, Gady Jacoby, and the participants of the Effectiveness of Financial Regulation conference for their helpful comments and suggestions.

Funders
Israel Securities Authority

Keywords

Financial advisors
Financial reform
Investor behavior
Regulation
Retail investors

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10.1016/j.frl.2024.105005

Cite this

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abstract = "This paper examines the impact of financial advisors on retail investor behavior in response to an Israeli regulation converting ETNs to ETFs. Our findings demonstrate that transactions influenced by financial advisors shifted from ETNs to index funds following the reform, while unadvised market participants{\textquoteright} tendencies did not change. This shift is attributed to the reform's cancellation of matched transactions, which changed the work routine for financial advisors. The results demonstrate that to be effectively implemented, financial reforms should consider their effect on market participants{\textquoteright} workflows.",

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Don't move my cheese: Financial advice adaptation to regulatory change

Abstract

Bibliographical note

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Keywords

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