The Use and Value of Financial Advice for Retirement Planning

Harlow, W. V.; Brown, Keith C.; Jenks, Stephen E.

doi:10.3905/jor.2019.1.060

Cited by 11 publications

(9 citation statements)

References 30 publications

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“…Financial advice services are valued because of advisers' expertise and its impact on shaping consumers' financial literacy (Harlow et al, 2020;Balasubramnian & Brisker, 2016). The advantage of financial advisors over automated advisors is reflected in their ability to take a broader view of consumers' financial situations and needs (Abraham et al, 2019), as well as read and respond to consumer emotions (Huang et al, 2019).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Demographic and Socio-Economic Factors as Barriers to Robo-Advisory Acceptance in Poland

Piotrowski

2022

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Theoretical background: One manifestation of the use of artificial intelligence technology in financial services is robo-advisory. Automated assistants are used in the area of communication with consumers and the sale of financial products. The development of robo-advisory services may contribute to increasing the availability of financial services and the cost efficiency of banks' operations. So far, however, robo-advisory has not been widely used in bank services, and the reasons for this can be seen in the lack of wide acceptance of robo-advisory by bank customers, among other things. Purpose of the article:The aim of this paper is to identify barriers to the acceptance of robo-advisory in the services of banks operating in Poland. Variables relating to the demographic and socio-economic characteristics of consumers were analysed. Knowledge in this area can provide banks with a practical guideline for activities aimed at increasing acceptance of artificial intelligence technology and wider use of robo-advisory in financial services. Research methods: The paper uses the results of a survey conducted in October 2020 regarding the application of artificial intelligence technology in the banking sector in Poland. The survey included a representative Pobrane z czasopisma Annales H -Oeconomia http://oeconomia.annales.umcs.pl Data: 09/01/2023 06:19:44 U M C S 110 DARIUSZ PIOTROWSKIsample of 911 Polish citizens aged 18-65. A multinomial logit model was employed to identify variables that represent significant barriers to robo-advisory acceptance in financial services. Main findings: The conducted research helped identify the barriers to acceptance of robo-advisory among consumers in Poland. A low propensity to use robo-advisory in bank services is characteristic of respondents from older age groups, as well as those who do not show a predilection for testing new technological solutions. Lack of experience in using investment advisory services and customer concerns about the misuse of personal data by banks are also significant barriers.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Demographic and Socio-Economic Factors as Barriers to Robo-Advisory Acceptance in Poland

Piotrowski

2022

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“…Retirement worry has received increasing attention over the past several years (Harlow et al, 2020). The antecedents of retirement worry are generously explored, including selfregulation (Howlett et al, 2008), financial knowledge (Lusardi and Mitchell, 2007), future orientation (Howlett et al, 2008;Jacobs-Lawson and Hershey, 2005), financial risk tolerance (Jacobs-Lawson and Hershey, 2005), personality traits (Hershey and Mowen, 2000), age and gender (Hershey and Wilson, 1997), and family income (Turner et al, 1994).…”

Section: Instrumental Variable Regression Modelmentioning

confidence: 99%

“…Financial advisors play an important role in helping people mitigate the rising retirement-related financial risks. Financial advisors can help by nudging people to think about retirement planning at an early age and save enough money for their retirement (Harlow et al, 2020). However, there is an inherent conflict of interest in the job of a financial advisor as her/his incentive is linked with the portfolio performance of clients (Brenner and Meyll, 2020).…”

Section: Introductionmentioning

confidence: 99%

Does robo-advisory increase retirement worry? A causal explanation

Chhatwani

2022

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PurposeArtificial intelligence and robo-advisory have become prevalent in the finance industry, and many people rely on robots instead of humans for financial advice. This study aims to examine whether robo-advisory increases retirement worry based on agency theory and rational choice theory.Design/methodology/approachThe present study investigate whether relying on robots for financial advice increases retirement-related worry in the present study. Using a sample of 1915 investors from the National Financial Capability Study (NCFS) survey, the author conducted instrumental variable regression analysis to examine the causal linkage.FindingsUsing fear of financial fraud as an instrument variable, the study provides a causal explanation of the linkage between robo-advisory usage and retirement worry. After controlling for sociodemographic and financial literacy-related variables, it is found that robo-advisory increases retirement worry.Originality/valueFindings of the study emphasize on downsides of the artificial intelligence-enabled robo-advisory for financial planning. This article provides evidence that a lack of human involvement in financial planning may lead to increased worry among investors, which calls for attention from the regulators and policymakers.

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“…Portfolios of professionally managed funds outperform portfolios of individual investors, even if those who chose individual investing were financially savvy (Cronqvist and Thaler 2004;Benartzi and Thaler 2002). A recent study by Harlow et al (2020) shows not only that the decision to hire a professional advisor is positively correlated with income and wealth, but also that using their advice increases replacement rates at retirement by 15 percentage points. Therefore, the use of financial advisors is more prevalent in groups that need it less and leads to further increases in retirement inequalities.…”

Section: Retirement Planningmentioning

confidence: 99%

Myopic Savings Behaviour of Future Polish Pensioners

Buchholtz

Gaska

Góra

2021

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Low saving rates combined with low effective retirement age herald old-age poverty. This paper examines the preferred strategies of future Polish pensioners in order to sustain the standard of living in the future. A two-step approach is used: as a first-best strategy, we explore determinants of supplementary saving with binary logistic models; as a second-best strategy, we examine alternative options with principal component analysis. Future retirees rarely accumulate long-term savings, do not use dedicated instruments, and they start to save additionally far too late. Savings are concentrated in wealthier and better educated groups. Such myopia is governed by their political stance and not by awareness of dire prospects. Second-best strategies are based on optimistic assumptions about future health (seeking for additional jobs), on the assumed generosity of acquaintances or social institutions (relying on external assistance), or on rebelling. Given the increasing political power of elder generations, balancing the interests of workers and retirees will be an increasingly difficult task for policy makers.

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The Use and Value of Financial Advice for Retirement Planning

Cited by 11 publications

References 30 publications

Demographic and Socio-Economic Factors as Barriers to Robo-Advisory Acceptance in Poland

Demographic and Socio-Economic Factors as Barriers to Robo-Advisory Acceptance in Poland

Does robo-advisory increase retirement worry? A causal explanation

Myopic Savings Behaviour of Future Polish Pensioners

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