Trust in Robo-Advisory Services: An Examination of Factors Shaping Investment Behavior

Abstract

Behavioural finance investigates how psychological factors influence financial decision-making. Trust is a critical psychological element shaping investor behaviour, especially in robo-advisory services, where human-machine interaction is dominant. This study examines the role of trust and its determinants in influencing investment decisions within robo-advisory platforms. The primary objective of this research is to study the role of trust in Robo-Advisory services and examine the factors shaping investment behavior. The primary data were collected from 202 respondents through a structured questionnaire from the investors in Kerala. Statistical analyses such as ANOVA, t-tests, and multiple regression were used to analyse the data. The study finds that respondents generally displayed a moderate level of trust in the reliability of recommendations provided by robo-advisory services. There was a relatively neutral stance on whether robo-advisory services would act in their best interest. This study is significant as it provides insights into the factors that affect trust in robo-advisory platforms. Understanding these factors can assist service providers in enhancing their contributions and guide investors in making informed decisions. The findings have practical implications for both groups, potentially fostering increased utilization and effectiveness of robo-advisory services. The study acknowledges limitations, including the potential for response bias, cross-sectional data, and the generalizability of findings to a broader population.