Robo-Advisors: A Big Data Challenge

Severino, Federico; Thierry, Sébastien

doi:10.1007/978-3-031-12240-8_7

Cited by 3 publications

References 28 publications

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Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

Eichler,

Schwab

2024

Front. Behav. Econ.

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The mini review assesses the value propositions of robo-advisors through the lens of behavioral finance. Despite their promise of data-driven, rational investment strategies, robo-advisors may not fully replicate the personalized service of human financial advisors or eliminate human biases in decision-making. A content analysis of 80 peer-reviewed articles and publications was conducted, focusing on the intersection of financial technology and behavioral finance. Literature was retrieved using The Chicago School University Library's OneSearch and the EBSCO host database, with key terms including “robo-advisor,” “investment behavior,” “risk tolerance,” “financial literacy,” and “affective trust.” The review identifies four key limitations of robo-advisors: (1) their inability to replicate the service-relationship of human advisors; (2) the presence of human bias in supposedly rational algorithms; (3) the inability to minimize market risk; and (4) their limited impact on improving users' financial literacy. Instead, robo-advisors temporarily compensate for a lack of financial knowledge through passive investment strategies. The findings suggest that integrating behavioral finance principles could enhance the predictive power of robo-advisors, though this would introduce additional complexities. The review calls for further research and regulatory measures to ensure that these technologies prioritize investor protection and financial literacy as they continue to evolve.

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Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

Eichler,

Schwab

2024

Front. Behav. Econ.

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Are Robo-Advisors Revolutionizing Portfolio Management for Enhanced Returns Over Human Advisors?

Kaur,

Tanwar

2024

Advances in Finance, Accounting, and Economics

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The financial services sector has undergone a significant paradigm shift in recent times due to the advent of artificial intelligence and robo-advisors. Portfolio management services, wealth management services, retirement planning, and investment allocation are few services catered by such robo-assisted automated investment platforms. It focused on examining the relative performance of robo-assisted automated investment advisor and human advisors under the segment of portfolio management and wealth management, with a particular focus on their capacity to generate higher returns. To enlighten about the rising trend of robo-advisor in portfolio management, the research methodology includes quantitative method and information from secondary sources. The study aims to ascertain the determinants that impact investor inclinations towards human advisors or robo-advisors. The study facilitates investors, financial institutions, and policymakers with recommendations and insights derived from research discoveries.

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Digital Transformation of Wealth Management

Bhatnagar,

Sharma,

Singh

2024

Robo-Advisors in Management

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The significance of robo-advisor adoption and portfolio allocation in risk mitigation enhancement based on this research has been brought to light. With the discussion presented in this chapter, financial managers will be able to integrate these views on harmonization and unification; hence, a successful approach towards risk management strategies and even adjusting their activities in line with various laws geared towards reducing issues of risks within financial sectors. The research underlines the value of using technological innovations and argues for financial institutions to implement robo-advisory services to manage risk in a quicker, more effective manner. This research offers financial managers with actionable knowledge on how to best model their frameworks for risk management in the optimization of achieving a better financial outcome for both institutions and their customers in an industry based on rapid changes.

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Robo-Advisors: A Big Data Challenge

Cited by 3 publications

References 28 publications

Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

Are Robo-Advisors Revolutionizing Portfolio Management for Enhanced Returns Over Human Advisors?

Digital Transformation of Wealth Management

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