Abstract: We document how pension investments by individuals in the Chilean social security system are influenced by portfolio recommendations of Happy and Loaded (H&L), a pension advice firm. Following H&L's recommendations about which of five portfolios to invest in, investors shift amounts that often exceed 20% of portfolios value and 1.3% of Chilean annual GDP, in a week. We uncover what drives investment recommendations, the resulting return consequences for the Chilean stock market and social security portfolios, and the characteristics of followers and their investment outcomes.

Paradoxically, investors who followed H&L's advice would have earned more by sticking with their original portfolio over time, regardless of the portfolio selected. These findings provide a cautionary tale for the design of privatized social security systems.

Bio: Dan Bernhardt is the IBE Distinguished Professor of Economics and Finance at the University of Illinois, and Professor of Economics at the University of Warwick in England. Professor Bernhardt works in a vast array of research fields, publishing almost 90 articles in refereed journals, including the very best journals in economics, finance, business and political science, and his work has been cited by the Nobel Prize Committee. Professor Bernhardt has been primary or secondary supervisor for over 80 PhD students. Professor Bernhardt is a co-editor of the Canadian Journal of Economics.