The moderating role of advisor big five personality on the association between financial advice and investor trading: Evidence from the Chinese futures market

Abstract

We examined how a psychological characteristic, namely advisor Big five personality moderate the influence of financial advice on investor futures trading. This research tested the hypotheses based on the unique data set collected from 408 investor-advisor dyads in Chinese futures market. Our results provide empirical evidence that the use of financial advice leads investors to trade more futures contracts when advisor personality tends to be openness, conscientiousness, and extraversion. On the other hand, financial advice negatively affects futures trading when the personality of advisors is likely to be neurotic. This research posits that retail investors trade differently if their advisors have a specific personality and therefore the investor trading patterns could be partly explained by exogenous supply-side factors. We suggest that the psychological characteristics of advisors can be relevant factors for policymakers in the financial services industry in order to improve their business.