Orientation in a Trust Dilemma. Constructed Relationships with Financial Advisors in Retirement Saving Decisions

Financial advice given by consultants is crucial for retirement saving decisions. We argue that those willing to save are facing a dilemma since there is a widespread mistrust towards the financial industry while financial advice is indispensable for coping with complexity in the decision process. Exploring the case of the state-subsidized Riester-pension in Germany, we show that savers construct personal relationships with the advisor to deal with this complex dilemma in terms of theories on trust. Using a mixed-method design embracing both quantitative techniques-cross-sectional as well as longitudinal (fixed-effects) approaches-and qualitative evidence, we shed new light on old age saving decisions. In detail, the exploitation of longitudinal surveys (of GSOEP and the German SAVE Panel 2004-2010) and of 18 problem-centred interviews provides the following findings: (1) Retirement saving decisions often rely on pre-existing relationships to financial advisors. (2) The less alternative resources available, the more savers rely on these relationships. (3) Financial advisors use their existing relationships to sell pensions. (4) The qualitative material unveils different patterns concerning the decision-making process which are trusteeship, strategic alliance, and acceptable ad-hoc collaboration. Altogether, the widespread idea of private retirement saving resulting from an atomistic and rational planning of the future is an illusion. Adapted from the source document.