Advertising and the Role of Information in the Fund Advisor Industry

, University of 黑料传送门 Booth 

, University of 黑料传送门 

, University of 黑料传送门 Booth 

Many economists have documented the striking degree of price dispersion in industries selling highly commoditized products and services but-for the brand name. Recent research has provided evidence that some of the brand premium may reflect buyer misinformation driven by barriers to objective information about objective product characteristics. In some industries, like financial services, uninformed buyers pay additional fees to hire agents to make informed purchase decisions on their behalf. We conduct a case study in partnership with T. Rowe Price to analyze the financial advisor (FA) industry. We test whether FAs make informed decisions. We run a large-scale randomized controlled advertising experiment online, using FAs as our subject pool. Our main objective is to study which factors drive FA demand for financial services instruments. In particular, we randomly assign tens of thousands of FAs to test cells. Each cell uses a different type of product information: brand, product, company expertise (human capital). We also include a control condition which consists of a public service announcement. Of interest is whether FAs are more responsive to objective information about the structure of specific mutual funds, the expertise of the team managing the funds, or to generic (fluff) brand-related slogans. Thus far, we have run a pilot study for which we can observe whether an FA clicks through on the ad (taking her to the T. Rowe Price website) and whether the FA, possibly at a later date, visits the website on her own accord. Our plan is to run a follow-up study in which we can tie ad impressions to expected leads and, ideally, revenues.