Factors Affecting Financial Advisor's Perception in Portfolio Management: with Reference to Pakistan

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FACTORS AFFECTING FINANCIAL ADVISOR’S PERCEPTION IN PORTFOLIO MANAGEMENT: WITH REFERENCE TO PAKISTAN

Ahmad Kaleem
Associate Professor,
Department of Business Administration,
Lahore School of Economics,
Burki Road Lahore, Pakistan.
Email: drkaleem@lahoreschool.edu.pk
Ph: 042-6560936, Ext 208; Fax: 042-6560905

Rana Abdul Wajid
Professor of Statistics,
Centre for Mathematics and Statistical Sciences,
Lahore School of Economics,
Burki Road Lahore, Pakistan.
Email: drrana@lahoreschool.edu.pk
Ph: 042-6560936, Ext 221 ; Fax: 042-6560905

Hassan Sagheer Hussain
MBA student,
Lahore School of Economics,
Burki Road Lahore, Pakistan.
Email: hassanhussain@hotmail.com

FACTORS AFFECTING FINANCIAL ADVISOR’S PERCEPTION IN PORTFOLIO MANAGEMENT: WITH REFERENCE TO PAKISTAN

ABSTRACT
This article explores the relationship between decision making by financial advisors, within the context of portfolio management and the factors that may influence such decisions in Pakistan. It argues that personal, psychological, socio-cultural, religious and gender issues influence the advisor’s perception leading him to a non optimal decision. The data for this research is collected through a specifically designed questionnaire, consisting of forty four (44) statements measuring a host of independent variables from each of the above mentioned factors, and seven (6) questions describing the respondents profile and one (1) question measuring the dependent variable: style of investment. Overall results concludes that the brokers/financial advisors considered friendly environment at workplace, followed by countries laws and then job satisfaction and quality of service as most important attributes. Same time, they gave least importance to gender related issues, quick profiteering and showed keen believe in the market fundamentals. Finally, the results indicate that age, income, language and orientation of education have significant role in determining the investment style of an investor.

Keywords: Investment decisions, Gender Impact, Risk Propensity, Financial Advisor, etc; 1. INTRODUCTION
Pakistan has seen consistency of economic growth during the past eight years. The government investment friendly policies has also helped in attracting back the savvy investors, changing the attitudes of the investors towards non traditional means of earnings through investment in stocks, bonds and mutual funds, as oppose to investment in commodities such as gold or land which has been the case in the past. Recent growth in financial markets have also increased reliance of investors on financial advisors who do not always make clinical evaluations using rational methodology, but systematically depart from utility maximization.[i]

This article collects and then examines the financial advisors and brokers views towards factors which they consider before making investment related decisions. It includes personal, psychological, socio-cultural, religious and gender related issues influence the advisor’s perception leading him to a non optimal decision. According to Coleman (2007), qualitative aspects of decision making in finance, a term which now falls under the scope of behavioral finance has long been seen important to individual investor and institutions. For, instance, Slovic (2000) suggests that: “many aspects of investment analysis are…psychological in nature”.

The current study should make the following contributions to financial behavior literature by examining the decision process of practicing financial advisors and how decision making is affected by the variables identified in the study. Further, the survey specifically incorporates questions to measure the decision maker’s perception and to enable the investors to develop an integrated model of decision making by financial advisors/manager. Finally, the results may add to a growing body of work in behavioral finance that seeks to understand the sources...
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