When financial advice rocks the market

We document the impact of recommendations by a hugely influential Chilean pension advisor, H&L, on pension investments by individuals, domestic stock market outcomes, and pension fund manager investment strategies. Following H&L's retirement portfolio recommendations, pension investors shifted amounts that, in a week, often exceeded 100% of monthly domestic stock trading volume. The market believed the recommendations—domestic stock prices responded, but they did so without trade: the massive portfolio shifts did not generate abnormally-high trading volume. To accommodate H&L's impact, pension managers adjusted portfolio compositions, making them more similar, and shifted holdings of liquid assets rather than domestic stocks.