Anna Ulrichshofer has successfully completed her doctorate

Do financial advisors deliberately recommend particularly risky investment strategies to their clients in order to maximize their own profits? This is what Anna Ulrichshofer, a research associate at THI Business School, investigated in her doctoral thesis. For her doctorate entitled "Incentives and Competition in Credence Goods Markets", the University of Innsbruck has now awarded her the Ph.D. title.

It is common practice in the industry for the success of all consultants to be measured individually and published in rankings. In a theoretical model, this motivates them to take higher risks in order to increase their own profit and thus perform better in these rankings.

Using data from specific customer complaints, Ulrichshofer tested whether the model holds true in practice. She investigated whether financial advisors who engage in misconduct change their behavior and, if so, how. She also explored the question of how this misconduct affects advisors' subsequent careers. "My results show that financial advisors who have already had customer complaints tend to repeat their risky behavior," Ulrichshofer says.

Moreover, Ulrichshofer's evaluations suggest that there are even firms that specifically recruit financial advisors who have been accused of misconduct but have not been proven to date. Thus, they even profit from risky behavior and exploitation of their clients' trust.