Financial advising
The following four comments expand the list given in the text under factors that predict the fees generated by a client that suggest six explanatory variables that can be added to the regres- sion model. Use these to improve the fit of the model summarized in Table 4. Be sure to determine whether the effects are statistically significant and consistent with the substantive advice.
(a) The financial provider charges higher fees to risky businesses that have a history of not paying off debt (loans that have been charged off). These clients may not pay the fees charged by the pro- vider, so the provider charges more to compensate for its increased risk.
(b) The longer a business has been around, generally the more skilled it is at managing its money and the less help it needs. The older the business, the smaller the fees.
(c) The financial provider helps manage property leases and charges fees for this service when requested.
(d) Businesses that operate in wealthy locations generate more fees than do those operating in low- income locations.