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What Is the Real Impact of Financial Services?

Measuring the impact of financial products and services on investor behavior is key to improving the industry.

In the financial-services industry, rarely do we rigorously assess whether our products and services actually help investors in practice. We know what drives our businesses, and whether a particular product could, theoretically, help investors. But our data on actual impact in practice is sorely limited, usually because we don’t have a clear vision of the rubber hitting the road: investor behavior after our products are bought or our advice is heard. That should change— to the benefit of investors and our industry.

Why Does It Matter?
Through my research career, I’ve been repeatedly amazed by the unintended and negative consequences of seemingly well-designed and well-intentioned systems. One of the most profound books on the topic is Dean Karlan and Jacob Appel’s More Than Good Intentions (2011). The authors detail how many of the world’s seemingly helpful international development efforts, like microfinance, seemed helpful, but were found to be ineffective or even detrimental once rigorous measurement was put in place.

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