We examine how investor sophistication influences returns in Brazil's structured products market using regulatory microdata. We introduce a novel sophistication measure based on prior trading experience across securities markets. Experienced investors systematically outperform inexperienced counterparts when trading complex products, exhibiting both persistent skill and superior learning capabilities. This experience-based measure is more predictive than conventional proxies such as wealth and age. Our findings suggest complexity obscures risk from unsophisticated investors, enabling rent extraction through strategic design. Results challenge wealth-based ``accredited investor'' standards, showing that measures of financial experience provide more effective criteria for protecting retail investors in complex markets.

We develop a theoretical model and test its predictions using granular search, choice,

and pricing data from the UK motor insurance market around the introduction of price

walking regulation. Before the policy, insurers attracted new customers with low prices

while raising prices for existing customers. After regulation, introductory discounts to

likely inactive customers fell, but insurers responded by proliferating products and segmenting the market more finely. Inactive customers therefore still pay a substantial

price penalty relative to active searchers, through different mechanisms. Our findings

illustrate how firms can redesign products in ways that blunt even well-designed regulation.

We study compensation in markets for expert advice. We document how a large class of client-facing professionals (lawyers, financial advisors, real estate agents) have employee forgivable loans — compensation advances structured as debt that employers can accelerate upon underperformance and separation. Analyzing millions of regulatory filings from the US securities industry, we illustrate how financial advisors routinely borrow 3-4 times their annual income, in ways that are entirely undisclosed to customers and credit bureaus, then spend the loan proceeds to lever up. Loans default, becoming the largest source of financial advisor delinquencies, and are conflicted, as advisors fund the resulting liquidity demands by defrauding their clients. Using a regression discontinuity design, we estimate that up to a third of all misconduct at large securities firms after the financial crisis is attributable to forgivable loans. We discuss reasons why firms may design compensation that incentivizes misconduct.