Portfolio management with the help of AI: What drives retail Indian investors to robo‐advisors?

Abstract

Portfolio management is a critical component of financial investments. With the advent of artificial intelligence (AI)‐driven portfolio management, retail investors have the choice to utilize cutting‐edge technology to manage their investment portfolios. This study analyzes and portrays the effects of factors influencing the adoption of financial robo‐advisors (FRAs) among retail investors in India. A framework comprising eight constructs is proposed to understand FRA adoption. Structural equation modeling (SEM) was used to analyze data from 387 respondents among Indian retail investors using the IBM SPSS AMOS version 28 software package. The results indicate that technology readiness and financial literacy are the two strongest predictors of the behavioral intention to adopt FRA. Additionally, this study provides empirical evidence that social influence and investor type are relevant determinants of customers' decisions to adopt FRA. This study provides managers with guidance on the target segment of consumers for FRA and insights into the drivers of adoption. It further highlights the importance of investor profiling beyond just demographics to improve adoption.