VGSF - WU Vienna - LC

Alessandro Previtero, Indiana University

Campus WU D3.0.225 11:00 - 12:30

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Aless­andro Pre­vitero from In­di­ana Uni­versity to present his re­search pa­per.
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Pa­per

Robo-ad­visers and In­vestor Be­ha­vior

In re­cent years, the rise of robo-ad­visers has provided a new, po­ten­tially more cost-ef­fect­ive ap­proach for of­fer­ing fin­an­cial ad­vice. Us­ing unique data from a large Ger­man re­tail bank, we in­vestig­ate the ef­fects of robo-ad­visers on cli­ents' port­fo­lios. We find that after join­ing a robo-ad­vising ser­vice, cli­ents in­crease fin­an­cial risk-­tak­ing, hold more di­ver­si­fied port­fo­lios with a lar­ger frac­tion of in­dex funds, ex­hibit lower home bias and trend chas­ing, and in­crease their (buy) turnover. These ef­fects are gen­er­ally stronger for former self-­dir­ec­ted in­vestors than in­vestors who have pre­vi­ously worked with a hu­man fin­an­cial ad­visor. In­vestors also learn from the robo-ad­vis­ory tool, as their port­fo­lio ef­fi­ciency im­proves also in the non-robo ad­vised part of their port­fo­lio. Our re­search can help un­der­stand the trade-offs as­so­ci­ated with us­ing robo-ad­visers.



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