This study investigates the relationship between investor optimism, financial knowledge, and advice from a finance professional. While other studies focus on how investor optimism influences financial behavior, this study examines the characteristics associated with investor optimism. We find that optimistic investors think they are more knowledgeable, as measured by subjective financial knowledge. At the same time, optimistic investor they are actually less knowledgeable, as measured by objective investment knowledge. We also find that optimistic investors are more likely to seek assistance from a broker. Our results highlight the importance of investor education on behalf of the finance professional to ensure realistic market and portfolio expectations.
Author(s): Andrew Scott, Wendy Usrey, Shane Enete, Miranda Reiter, and Martin Seay
