Rethinking Financial Advice: Human vs Robo Interface

SKBI Newsletter | February 2026  

Rethinking Financial Advice: Human vs Robo Interface

Research Perspective

Industry Insights

Pengfei Ma,
Assistant Professor of Finance at SMU

Elena Okorochenko,
Former Managing Director and Head of Asia-Pacific at S&P Global Ratings

Many households rely on financial advisors for investment guidance, yet academics have raised concerns about the cost and quality of this service. In recent years, robo-advice has emerged as a potentially more cost-effective alternative. A recent SMU working paper examines how robo-advisers affect key aspects of clients’ portfolio choices and whether/how investors learn from them.

The rapid growth of the robo-advisory industry is reshaping how retail investors interact with finance. In light of this shift, Elena shared her perspectives on the broader implications of robo-advisory for inclusion, investor behaviour and industry strategy.

Key Messages:

• After joining a robo-adviser, investors increase financial risk-taking and reduce under-diversification, home bias, and holdings of actively managed funds.
• Robo-advice also generates spillovers to clients’ other investments: investors take more risk, reduce biases, and adopt similar strategies in their self-directed accounts.
• These effects are stronger among less financially sophisticated investors, who appear to learn more from the robo-adviser.

Overall, our findings suggest that robo-advisers improve portfolio quality and facilitate investor learning.

Loos, B., Ma, P., Previtero, A. and Hackethal, A., 2024. Robo-advisers and Investor Behavior. Working Paper.

Key Challenges:

• Robo-advisors and human advisors serve different roles. While robo-advisors may perform well in bull markets, it would be interesting to examine whether their reliability declines during market downturns, in contrast to human advisors who can offer more adaptable guidance in bear markets. 
• Financial inclusion often relies on government investment. Robo-advisors offer a market-based solution by providing a low-cost way to integrate lower-income groups into the financial system without government support.
• The inclusion of investors and their learning through robo-advisory services benefits the bank by expanding its business. However, it also poses challenges to its traditional operations and strategies.

Overall, Elena emphasised that Prof Pengfei’s findings hold value for various sectors such as retail investors, policymakers, and for banks, noting that “this research has implications for how banks position their human advisory functions and refine their robo-advisory strategies”.

Meet the Author:
Asst Prof Pengfei Ma joined SMU in 2023 after completing his PhD in Finance from Indiana University. His research interests lie in Corporate Finance, Banking, Behavioural Finance, Real Estate Finance and more.

Meet the Expert:
Elena Okorochenko was the Former Managing Director and Head of Asia-Pacific at S&P Global Ratings. Her expertise spans capital markets, M&A (both greenfield and cross-border), emerging markets, and APAC economies. She holds a master’s degree in economics from the Higher School of Economics in Moscow and has been on the SKBI Advisory Board since 2021.

About SKBI:

The Sim Kee Boon Institute generates financial economic research through multidisciplinary collaborations involving not only the SMU community, but also research talent from around the world as well as industry and public-sector partners. The Institute will focus its efforts on the areas of (1) Market Innovations and FinTech, (2) Sustainability and Green Finance, and (3) Household Finance and Behaviour. To maintain relevance to finance practitioners and policy-makers, SKBI also adopts a view on Asian and global economic trends. View SKBI’s research. 

About the SKBI Newsletter:

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