Robo-Advice and the Future of Delegated Investment

Journal of Financial Transformation, Vol. 51, pp. 20-27, April 2020

13 Pages Posted: 23 Jun 2020

Date Written: February 12, 2020

Abstract

Robo-advisors can replace financial advisors and asset managers at low costs. However, human managers and advisors will survive for a number of reasons: First, robo-advisors primarily appeal to a clientele of already financially sophisticated investors, they lack some of the qualities people look for in a “money doctor”, and their business model still stands to the test of time. While a general algorithm aversion is absent in the financial domain, even tech-savvy millennials do not particularly favor robo-advisors. As new survey data shows, investors view algorithms as an aid to human managers rather than competitors. A hybrid model with humans and robos working together, as already implemented by some financial institutions, might be the future of delegated investment.

Keywords: Robo-advice, Delegated Investment, Financial Advice, Asset management,

JEL Classification: G11, G21, G23, G41, G51

Suggested Citation

Merkle, Christoph, Robo-Advice and the Future of Delegated Investment (February 12, 2020). Journal of Financial Transformation, Vol. 51, pp. 20-27, April 2020, Available at SSRN: https://ssrn.com/abstract=3612986

Christoph Merkle (Contact Author)

Aarhus University ( email )

Nordre Ringgade 1
DK-8000 Aarhus C, 8000
Denmark

HOME PAGE: http://christophmerkle.github.io/

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