Sustainable Investment Preferences among Robo-Advisor Clients

Abstract

The increasing role of individual investors in supporting the achievement of sustainable development goals through sustainable investment has gained growing interest from financial authorities and the research community. Digitalization in the financial sector, e.g., robo-advisors, enables lay-investors to make sustainable investments in a simple and convenient way. This study investigates whether investment-related attitudes and demographic profiles are related to robo-advisor clients’ sustainable investment choices. This paper describes an empirical study that uses a logistic regression model to investigate sustainable investment preferences at the individual investor level. Cross-sectional data consisting of 27,771 individual investors in Sweden, Norway, and Finland, who purchased investment products through a robo-advisor application, are used in this study. The results suggest that, concerning investment-related attitudes, robo-advisor clients with low-risk tolerance and a short investment horizon are more likely to choose to become sustainable investors. Furthermore, sustainable investments are preferred by robo-advisor clients who are less wealthy, female, and older.

Consumer Segmentation of Green Financial Products Based on Sociodemographic Characteristics

“…During our examination of the decisions made by Hungarian retail investors, a cluster of C3-Sustainable financial investors emerged as distinguishable. Regarding their sociodemographic characteristics, the results of our analysis partially align with the findings of Faradynawati and Söderberg's (2022) research. Based on our research results, it can be stated that green financial products are more likely to be preferred by female consumers who are young, female and highly educated.…”

“…Based on our research results, it can be stated that green financial products are more likely to be preferred by female consumers who are young, female and highly educated. This is justified by the fact that females have different cognitive abilities, risk-taking attitudes and decision-making styles than males (Faradynawati and Söderberg 2022). Female investors, who are highly educated, consider sustainability aspects as an important factor that determines long-term sustainable development; thus, they are more inclined to take them into account in their investment decisions (Hill et al 2006).…”

Fintech: Digital Transformation of Financial Services and Financial Regulation

“…This intricacy poses a challenge for regulators, as it becomes challenging to define the precise boundaries of regulation in practice. This ambiguity can facilitate the propensity for intelligent investment advisory platforms to venture beyond their core activities and engage in potentially illicit activities, such as deceptive marketing, disguised financial exploitation, and unauthorized fundraising [6].…”

The Adoption of Robo-Advisory among Millennials in the 21st Century: Trust, Usability and Knowledge Perception

“…Specifically, households with low levels of trust, good financial education, and preference for transparency are characterised by a higher probability of adopting FinTech. Robo-advisor users, especially those who are less rich, with low risk and a short investment horizon, may choose to become sustainable business owners [9].…”

“…When the level of involvement of the investment is high, consumers tend to seek more personalised and tailored financial advice, and they may feel more comfortable consulting with a human financial advisor rather than relying solely on digital or automated advice, like robo-advisory [8]. On the other hand, according to [9], robo-advisor users in Sweden, Norway, and Finland who are less rich, female, and older aspire to become sustainable investors and have low risk tolerance and a short investment horizon. Nonetheless, their study excluded from the analysis other variables that might be relevant, such as financial literacy, digital literacy, and prior knowledge in investment.…”