Do retail stockbrokers understand clients' investment preferences?

Recent research has suggested that individual share investors fall into a number of groups with distinct preferences for particular share characteristics. The majority are relatively risk-averse and seek stable investments. An important source of advice for these investors is their stockbroker. But, how well do stockbrokers understand their clients' attitudes and preferences? The present paper suggests that retail stockbrokers overestimate their clients' willingness to take risk and to invest in more speculative stocks. As on-line stockbroking is providing significant competition to the traditional full-service broker, stockbrokers must understand their clients' needs. If this is not the case, it may be difficult for retail stockbrokers to give appropriate advice or for a fruitful adviser–client relationship to be established.