Demand for financial advice: Evidence from a randomized choice experiment

•We explore the consequences of introducing a commission ban in the mortgage market.•We use a randomized choice experiment (n = 2126) using the Dutch Household Survey.•We show that making costs of financial advice salient reduces demand for advice.•Our results are not driven by differences in financial sophistication of clients.•Present-biased clients express less willingness to pay for advice upfront. How does the salience and structure of costs for financial advice influence consumer demand? This study conducts a randomized choice experiment exploring possible consequences of introducing a commission ban in the retail mortgage market. A sample of more than 2100 participants of the Dutch Household Survey panel reveals that in a fee-based regime, in which the costs of advice are salient and must be paid upfront, demand for advice decreases by 25 % compared with a situation in which the same costs are embedded in mortgage payments. We do not find evidence that such demand effects for financial advice varies across less versus more sophisticated customers. At the same time, we do find that customers with a stronger focus on the present express less willingness to pay for advice upfront.