Ethical Imperatives for Rational Paternalism in Advisor-Client Relationships

This dissertation examines rational paternalism's ethical and practical applications within advisor-client relationships in Financial Services. While rational paternalism has been extensively studied in governmental and institutional contexts, its role in personal financial advising remains underexplored. Using Agency Theory as a guiding framework, the study examines how financial advisors perceive and implement paternalistic strategies to act in clients' best interests—particularly when those clients exhibit bounded rationality or behavioral biases. Through qualitative methods like content analysis and semi-structured interviews with advisors and clients, the research inspects the extent to which rational paternalism is practiced and ethically justified. Findings indicate that advisors often use paternalistic approaches akin to those in law and healthcare but do so inconsistently due to regulatory ambiguities, perceptions of themselves, and trust barriers. The study concludes that when applied judiciously and transparently, rational paternalism enhances ethical decision-making, empowers clients, and elevates financial advisory to a higher professional level and a higher standard of care and accountability in the eyes of the general public and advisor's self-perception.

Committee
Daniel Ogbaharya, PhD, Chair

Christopher Voparil, PhD

Jennifer Raymond, PhD

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