Professor Hartzell is studying agency conflicts in the relationship between financial planners and their clients. Planners are agents acting on behalf of their clients, the principals. Conflicts of interest can arise in this relationship, most notably from distortions in the planners' incentives due to their compensation structure. For example, planners may have an incentive to recommend products that produce commissions. Conversely, planners may have an incentive to avoid products that prevent them from charging a fee to manage the assets. These conflicts of interest could be mitigated or exacerbated by several factors. These include competition in the market for financial advice, the costs for the client of monitoring the planner, the legal and ethical responsibilities of the planner as a fiduciary, and whether the planner is compensated on a fee and/or commission basis.
