Effects of Investment Advice on Investment Trusts: Evidence from Individual Investors Using Japanese Banks

This study examines the association between customers’ assessments of financial guidance from advisors at Japanese regional financial institutions and their investment behavior regarding investment trusts. Using multi-year survey data from Japanese investors, we analyze how different facets of financial advice, including risk and cost explanations and information provision, are associated with investment decisions. The results indicate that investors who provide more favorable evaluations of financial advice tend to allocate a larger share of their assets to investment trusts. This pattern is particularly evident for evaluations related to information provision. In addition, investors who purchase investment trusts through in-person channels tend to be older and to have lower financial literacy. Among these investors, higher evaluations of advice are associated with both a greater likelihood of initial investment and higher allocation levels. Overall, the findings suggest a robust association between subjective evaluations of financial advice and portfolio allocation decisions, without implying a causal relationship.