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Journal of Finance Vol. 64 No. 5 2009

Attracting Flows by Attracting Big Clients

Lauren Cohen; Breno Schmidt1,2

1 Lauren Cohen is from Harvard Business School and NBER. Breno Schmidt is from Marshall School of Business at the University of Southern California. The authors thank Andrew Ang, Nick Barberis, Jeff Brown, Joe Chen, Judy Chevalier, James Choi, Sean Collins, Doug Diamond, Marty Gruber, Michael Hadley, · 2 Lauren Cohen is from Harvard Business School and NBER. Breno Schmidt is from Marshall School of Business at the University of Southern California. The authors thank Andrew Ang, Nick Barberis, Jeff Brown, Joe Chen, Judy Chevalier, James Choi, Sean Collins, Doug Diamond, Marty Gruber, Michael Hadley,

Abstract

We explore a new channel for attracting inflows using a unique data set of corporate 401(k) retirement plans and their mutual fund family trustees. Families secure substantial inflows by being named trustee. We find that family trustees significantly overweight, and are reluctant to sell, their 401(k) client firm's stock. Trustee overweighting is more pronounced when the relationship is more valuable to the trustee family, and is concentrated in those funds receiving the greatest benefit from the inflows. We quantify this flow benefit and find that inclusion in the 401(k) plan has an economically and statistically large, positive effect on inflows.

DOI
10.1111/j.1540-6261.2009.01496.x
Volume
64
Issue
5
Pages
2125-2151
Language
en
Sources
openalex crossref

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