The Fintech Revolution and the Changing Role of Financial Advisors (original) (raw)
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The Impact Of Robo-Advice On Financial Advisers: A Qualitative Case Study
2018
One of the most significant recent technological developments concerns the application of robotics and Artificial Intelligence (AI) to skill-intensive, knowledge-based jobs. The financial adviser is a role that has been identified as being under threat from automated robo-advice services. However, there are conflicting views on the future of human financial advisers. It has been argued that human financial advisers will soon become obsolete because robo-advisers are lower cost and make fewer mistakes. Conversely, it has been argued that financial investment is an emotional process that requires empathy and reassurance that cannot be provided by automated robo-advisers. In this exploratory study we use service encounter theory to explore the key elements of the financial adviser job role, identifying where human interaction with the client was considered to be valuable. Our findings suggest that roboadvisers are likely to augment rather than substitute human financial advisers.
Digital Twin: Financial Technology’s Next Frontier of Robo-Advisor
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This research examines the concept of a robo-advisor with digital twin capabilities for personal financial management. Using an exploratory study, the researchers developed an interactive and interpretive model that analyses the most critical variables to consider when designing the next level of financial robo-advisor through integrating digital twin concepts and applications. Primarily, it conducts an assessment and then reviews the data to propose a model that can serve as a baseline for future research. Related literature was explored, including peer-reviewed journal articles, case studies, periodicals, newspaper articles, and books. This study aims to assess the concept of digital twin (DT) as the next frontier of robo-advisor as a new wave of intelligent financial advisors in supporting the personalisation and customisation of financial technology (FinTech) services and management. Individuals who use a DT-enabled robo-advisor may find a significantly greater value for their f...
Artificial Intelligence in FinTech: understanding robo-advisors adoption among customers
Purpose -Considering the increasing impact of Artificial Intelligence (AI) on financial technology (FinTech), the purpose of this paper is to propose a research framework to better understand robo-advisor adoption by a wide range of potential customers. It also predicts that personal and sociodemographic variables ( familiarity with robots, age, gender and country) moderate the main relationships. Design/methodology/approach -Data from a web survey of 765 North American, British and Portuguese potential users of robo-advisor services confirm the validity of the measurement scales and provide the input for structural equation modeling and multisample analyses of the hypotheses. Findings -Consumers' attitudes toward robo-advisors, together with mass media and interpersonal subjective norms, are found to be the key determinants of adoption. The influences of perceived usefulness and attitude are slightly higher for users with a higher level of familiarity with robots; in turn, subjective norms are significantly more relevant for users with a lower familiarity and for customers from Anglo-Saxon countries. Practical implications -Banks and other firms in the finance industry should design robo-advisors to be used by a wide spectrum of consumers. Marketing tactics applied should consider the customer's level of familiarity with robots. Originality/value -This research identifies the key drivers of robo-advisor adoption and the moderating effect of personal and sociodemographic variables. It contributes to understanding consumers' perceptions regarding the introduction of AI in FinTech.
Financial technologies in personal financial planning: robo-advice vs. human-advice
Ruch Prawniczy, Ekonomiczny i Socjologiczny, 2020
The paper presents the essence of financial technologies in personal financial planning, especially robo-advice. The main aim of the paper is to describe the presumptions for the development of robo-advice. An analysis of robo-advice on personal finance management was made. The analysis was based on a review of the subject literature, and on primary and secondary research. Particular attention was paid to the intensification of activities in the implementation of modern solutions and tools supporting the management of personal finances and the gradual development of robo-advisors. Modern solutions are still struggling with great distrust on the part of their current and potential customers, and the development of modern technologies in liquidity and asset management still requires a human factor.
Robo-advisors as Automated Personal Financial Planners – SWOT Analysis
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Automatic financial consulting (robo-advice) is a financial innovation in the area of personal financial planning, and in particular investment consulting classified as fin-tech (financial technology). The main disadvantage of traditional investment advice is limited availability due to the required amount of assets and high management costs. These disadvantages are answered by robo-advice, using artificial intelligence and algorithms without the participation of a physical adviser, thereby reducing or abolishing minimal assets and reducing costs [Kocianski 2016]. The purpose of the article is to analyze strengths and weaknesses as well as opportunities and threats of robo-advisors, especially when compared to traditional financial advisors. This paper is an analysis of a history, regulations, application, functionality and development of Robo-Advice. The concept of Robo-Advice was critically analysed, with presentation of current strength and weaknesses, as well as opportunities an...
Robo-Advisory: The New Paradigm in Asset Management or a Millennial Fad?
International Journal of Contemporary Research and Review , 2019
Finance and technology are inching closer to convergence by the day; while older investors may be reluctant to have robots doing their investing for them, many millennials are jumping unto the new asset management bandwagon. Thus, allowing algorithms to predict and recommend investment plans and automatically balance portfolios for them based on information such as age, risk tolerance level, investment goals, etc. Robo-advisory software programs periodically buy and sell securities to keep the mix matched to investors' risk tolerance. This study shows that the emerging issues around fintech only serve to signal that the asset management industry is set for a massive overhaul as more investors seek to substitute the human asset manager for robots and algorithms. Personal finance management especially for low net worth individuals is in a nascent stage of undergoing a complete revolution as these technologies continue to develop. Adventurous investors are encouraged to try robo-advisory services. Although robo-advisory is still at a very rudimentary level especially in developing countries, asset management companies need to recognize the impending disruption and use it to their advantage or risk being smothered by the technology. Introduction:
Advances in science, technology and engineering systems journal, 2024
Robo-advisors, fundamental to the financial services sector, have undergone substantial technological metamorphosis. Innovations in artificial intelligence, blockchain, cloud technology, augmented reality, and virtual reality have reshaped the financial industry's landscape. As automated investment solutions, robo-advisors are on the brink of further technological evolution. This comprehensive research amalgamates historical data, behavioral insights, and emerging market trends to provide technology-centric recommendations for the robo-advisory industry. Emphasizing the significance of a global perspective, the study explores the adoption of full-scale optimization in portfolio construction and the integration of digital twin capabilities. It delves into the burgeoning realm of Natural Language Processing facilitated by AI-driven chatbots in financial technology companies. These recommendations stand as pivotal pillars for steering the ongoing technological advancements of robo-advisors in the ever-evolving landscape of the financial sector
The acceptance of financial robo-advisors among investors: The emerging market study
Journal of Governance and Regulation
Robo-advisory services are a relatively new concept in the financial world. However, Epperson, Hedges, Singh, and Gabel (2015) report that many investors are extremely interested in employing robo-advisors to manage their finances. Nowadays, robo-advisers develop profiles of investors using very basic surveys to determine their investing preferences. The advantage of robo-advisory is that it charges far less than traditional private bankers (PB) since robo advisors do not require additional labour (Cho, 2019). Having considered the utility of such services, this research aims to examine the acceptance of financial robo-advisors. The findings indicate that average monthly income, value invested in financial instruments, and investment knowledge affect an acceptance of financial robo-advisors as regards their effects on profits, careers in finance, and the overall economic system, and vice versa. The drawback of the study is that the results demonstrate the relationship between indepe...
The Disruptive Potential of Robo-Advisory on the Wealth Management Business Model of Banks
Proceedings of the International Conference on Applied Research in Management, Business and Economics, 2019
We investigate the disruption potential of robo-advice on the wealth management market in Germany. The special focus on the German market intends to close the gap of scarcely existing literature for this target country. Our qualitative research approach consists of 13 conducted expert interviews with top-management representatives from the financial industry. The interview transcripts underwent a structured content analysis based on inductive and deductive categories resulting from a performed literaturereview. The key findings indicate, that there are four major obstacles avoiding significant disruption in personal wealth management: (1) pending performance proof in market drawdowns, (2) misleading price-performance-ratio, (3) limitations in the affluent business and (4) the existence of the scaling-strategyparadox. Our overall conclusion stresses the fact, that robo-advice is relevant for German investors and thus for banks to implement in their service offering. Although the digital service misses a long-standing track record and even may not be as costefficient as suggested, it already demonstrates disruption in the retail business. However, robo-advisors are technically not ready yet to meet investor needs of high net-worth individuals, which may be decisive due to an upcoming market consolidation. Scaling effects are difficult to achieve without collecting high investment volumes from the affluent business segment. Hence, current robo-advicestrategies on market are paradox due to their technical capabilities and strategic orientation on the retail market.