I22 - Educational Finance; Financial AidReturn

The article deals with the analysis of the cost of retail investment products, with a focus on prepaid entry fees. These form the basis of the initial remuneration for the investment advisory service and at the same time also a significant cost item, reducing the value of the investment in the first years. The article models their effect in a broader context, not only as a simple mathematical difference between two otherwise similar investment programs. In particular, the behavioral dimension is taken into account, both in the form of the so-called behavioral gap, advisory alpha and also excessive conservatism of Czech investors. These factors are quantified on the basis of literature inputs and a quantitative model is compiled using them. The result is the finding that despite the higher fee burden, it is advantageous for an investor burdened with a behavioral gap and excessively conservative allocation to accept the advantageous market costs of investment advice. Assuming that this service delivers a surplus yield (alpha), the investment result is ultimately significantly positive for the average consumer.