Adoption of Robo-Advisory in Investment Management: Insights from Individual Investors

Adoption of Robo-Advisory in Investment Management: Insights from Individual Investors

Ruby Mittal et al.,

Robo-Advisory | Financial Technology

 Vol: 11; No: 2; Jun. 25 | ISSN: 2455-3921   

Study Objective: With the rapid growth of fintech, investment management is increasingly turning to robo-advisory services. However, the behavior of individual investors in adopting this technology remains to be explored. This study examines how an investor’s willingness to use robo-advisory services is influenced by perceived transparency, perceived effectiveness, perceived usability, and perceived trust.

Research Methodology: For the study purpose, a structured questionnaire and SPSS software was used. To accomplish the research objectives descriptive statistics, correlation analysis, and multiple linear regression were employed to determine the relationships among the selected variables.

Findings of the Study: The study results revels that perceived effectiveness and perceived transparency are the most significant variables influencing willingness to adopt robo-advisory services. Whereas, perceived trust has a negative impact with the willingness to adopt robo-advisory services. From the findings, study suggested that excessive trust in traditional financial advisors may discourage the adoption of robo-advisory services.

In addition, perceived usage factor was found to be an insignificant predictor of future adoption behavior. Further to it, regression model explains of the variance in adoption willingness, it also confirming its statistical significance to the study.

Practical Implications: The Findings indicate that fintech companies and financial advisors should emphasize to enhancing the effectiveness and transparency of robo-advisory platforms to increasing investor confidence and adoption level of technology. Furthermore, financial institutions might want to focus on educating investors about the reliability of algorithms for making decisions rather than depending on traditional trust-building methods.

Research Originality: This study contributes in the field of research on financial technology adoption. By showing that trust may not always be an encouraging element in the adoption of robo-advisors, by highlighting the perceived efficacy and perceived transparency perform in investment decision-making, it additionally supports the Technology Acceptance Model (TAM) and the Unified Theory of Acceptance and Use of Technology (UTAUT).

Ruby Mittal, Assistant Professor, MVN University, Palwal, India