ESSEC-Amundi Chair Webinar

ESSEC - Amundi Chair

Over the past few decades, individual investors have increasingly turned to financial advisors to help navigate investment decisions. While such guidance can be valuable, it is often costly and has raised concerns regarding its quality and independence. The emergence of robo-advisors offers a new way to deliver financial advice, using automated algorithms to guide investment decisions. These platforms promise broader accessibility and cost savings, especially for standard investment products. At the same time, they raise concerns related to increased risk-taking, and opacity in decision-making processes.The first paper presented by Alessandro Previtero (Indiana University and NBER) uses data from a German retail bank to investigate the effects of the introduction of a robo-advisory tool on key aspects of client’s portfolio decisions. The study explores whether robo-advice encourages greater financial risk-taking, helps reduce common investment biases, or generates positive spillover effects on other accounts not directly managed by the robo-advisor. Their empirical analysis reveals that robo-advice has a significant impact on retail investors’ investment decisions and it offers a more cost-effective approach to financial advising, especially for less sophisticated investors.The second paper presented by Christoph Merkle (Aarhus University) explores the investment decision of new clients of a German robo-advisor for sustainable investment and investigates the factors driving these choices. This analysis is validated by a pre-registered field experiment in which the authors observe retail investors’ choices in a natural environment when they invest in their own funds. The empirical analysis shows that setting sustainable investing as the default option has a significant impact on investor behavior and increases the adoption of sustainable investment compared to when conventional investing is the default. In addition, the authors show that there is a strong positive correlation between beliefs about return and risk and the type of investment chosen.

ESSEC-Amundi Chair Webinar

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ESSEC-Amundi Chair Webinar

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