Robo-Advisors: A Substitute for Human Financial Advice?

14 Pages Posted: 5 Jul 2019 Last revised: 10 Jul 2019

See all articles by Lukas Brenner

Lukas Brenner

University of Marburg | Institute of Accounting and Finance

Tobias Meyll

University of Giessen - Department of Financial Services

Date Written: June 3, 2019

Abstract

Using representative US investor data, we investigate whether automated financial advisors, also referred to as robo-advisors, reduce investors’ demand for human financial advice offered by financial service providers. Our results provide a strong negative relationship between using robo-advisors and seeking human financial advice. We show that the substitution effect of robo-advisors is especially driven by investors who fear to be victimized by investment fraud. Our findings suggest that robo-advisors seem to offer a valid alternative for seeking investment advice, especially among those investors who worry about potential conflicts of interest that appear in the context of human financial advice.

Keywords: Robo-Advisor, Financial advice, Digitalization, FinTech, Digital wealth management

JEL Classification: D14, D18, G11, O33

Suggested Citation

Brenner, Lukas and Meyll, Tobias, Robo-Advisors: A Substitute for Human Financial Advice? (June 3, 2019). Available at SSRN: https://ssrn.com/abstract=3414200 or http://dx.doi.org/10.2139/ssrn.3414200

Lukas Brenner

University of Marburg | Institute of Accounting and Finance ( email )

Tobias Meyll (Contact Author)

University of Giessen - Department of Financial Services ( email )

Licher Strasse 74
Giessen, Hessen 35394
Germany
+49 (0) 641 9922522 (Phone)

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