Financial Advice and Robo Advice in the Investors' Perception. Evidence from a Qualitative Study

71 Pages Posted: 4 Sep 2020 Last revised: 16 Dec 2020

See all articles by Massimo Caratelli

Massimo Caratelli

University of Roma Tre - Department of Business Studies

Claudio Giannotti

LUM Jean Monnet university

Nadia Linciano

Commissione Nazionale per le Societa e la Borsa (CONSOB)

Paola Soccorso

Commissione Nazionale per le Societa e la Borsa (CONSOB)

Date Written: December 1, 2019

Abstract

The ongoing institutional debate wonders whether robo advice may potentially bridge the advice gap, by reaching both ‘underserved' and ‘excluded' investors, who are unable to fully access the service. The present work aims to investigate the factors that may trigger both potential and actual interest in robo advice, thus contributing to widen the segment of investors receiving personalised recommendations. The study analyses the qualitative evidence gathered from two focus groups and four in-depth individual interviews, all involving investors. The participants in the focus groups are, respectively, investors supported by a human financial advisor (i.e., making decisions after receiving a customised recommendation by a dedicated advisor) and individuals interacting with bank staff only (i.e., making decisions without the support of a dedicated advisor). Individual interviews involve four users of one of the main providers of automated advice services active in the Italian market. Overall, the study highlights that the perceived objectivity of the algorithm and the customer experience granted by a digital platform may trigger (or have already triggered) interest in robo advice, mainly among financially and digitally literate investors. However, the hybrid model is always preferred to the pure automation, as the interaction with a human advisor is deemed as valuable both on educational grounds and in the occasion of key phases of the investment (e.g., portfolio monitoring or market turmoil). Given the evidence of this qualitative study, therefore, the hybrid robo advice can potentially bridge the advice gap for the more sophisticated investors, to the extent that they are willing to accept technology developments. To our knowledge, this is the first qualitative study that contributes to the debate on the advice gap by providing food for thought important for consumer protection policies and educational initiatives.

Keywords: FinTech, digitalizzazione, consulenza automatizzata, robo advice, consulenza in materia di investimenti, MiFID II, focus group, in-depth interview

JEL Classification: D14, D18, G23, G41, G51, G53, K22

Suggested Citation

Caratelli, Massimo and Giannotti, Claudio and Linciano, Nadia and Soccorso, Paola, Financial Advice and Robo Advice in the Investors' Perception. Evidence from a Qualitative Study (December 1, 2019). CONSOB Fintech Series No. 6, Available at SSRN: https://ssrn.com/abstract=3685372 or http://dx.doi.org/10.2139/ssrn.3685372

Massimo Caratelli

University of Roma Tre - Department of Business Studies ( email )

Via Silvio D'Amico, 77
Rome, RM 00145
Italy

HOME PAGE: http://www.disa.uniroma3.it/

Claudio Giannotti

LUM Jean Monnet university ( email )

Casamassima, BA 70010
Italy

Nadia Linciano (Contact Author)

Commissione Nazionale per le Societa e la Borsa (CONSOB) ( email )

Roma 00198
Italy

Paola Soccorso

Commissione Nazionale per le Societa e la Borsa (CONSOB) ( email )

Roma 00198
Italy

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