Do you Pay a Premium for Responsible Investments?
08/11/2021
An unprecedented number of investors give their financial advisors a mandate for socially responsible investing (SRI). Yet, the impact of SRI mandates on consumers is unclear. In a pre-registered lab-in-the-field experiment with 345 professional advisors, Paul Smeets and Marten Laudi find that advisors charge a premium to SRI clients that cannot be justified by higher effort, skill, or costs.
This suggests that advisors exploit the SRI preferences of their clients (who accept these higher fees). In an independent survey, financial regulators predict higher SRI fees but do not predict exploitation. Regulators confirm that the findings require attention from policymakers.
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Related experts
Paul Smeets
Professor in Philanthropy and Sustainable Finance
Marten Laudi
PhD Candidate in Finance
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