Determinants Shaping Choices for Robo and Human Advisors in The German Financial Market: The Analysis of Retail Consumers

The financial industry has witnessed the emergence of robo-advisory, a Fintech breakthrough resulting from the integration of digitalisation in the era of robo-technology. The adoption of technology and Artificial Intelligence (AI)-based advisors are now becoming common in different functions of everyday life. The financial technology market is also heading in the same direction. This research is aimed at performing an analysis of consumer perspectives on the adoption of robo-advisors in the German financial industry. For this purpose, this study intends to investigate the impact of opportunities, and threats on the intention to use robo-advisors by the German retail investors. This study uses cross-sectional data from 145 respondents using an online questionnaire to analyse factors impacting retail consumer decision-making regarding human and robo-financial advisors in Germany. Two step PLS-SEM model is applied to analyse the data. It is concluded that men, younger individuals (aged 18-35 years), those with higher financial literacy (master’s degree), and income (more than -500 euros) groups are more likely to invest through robo-advisors. The findings of PLS-SEM show significant positive relation between opportunities and intention to use robo-advisors. The findings further show significant negative relation between threats and intention to use robo-advisors. Robo-advice can contribute to financial inclusion and help financially less literate investors to invest in the capital markets. If the regulators of robo-advisors and robo-advisors themselves can ensure a high degree of precision and suitability for investors, then robo-advice has a great potential to balance, irrespective of replacing traditional financial advisors in the future.