Robo-advisors and the transformation of investment behavior of retail stock market participants

Abstract

Purpose – to analyze the impact of robo-advisors on the transformation of investment behavior among retail stock market participants, to identify the specific features of automated investment platforms, and to assess the influence of artificial intelligence and algorithmic technologies on investment portfolio management processes.

Methods – dialectical, abstract-logical, comparative, and analytical methods, as well as methods of system analysis, generalization and comparison of rating agency data, and analysis of scientific literature and modern approaches in the field of financial technologies were applied in the study.

Results – the study revealed that robo-advisors provide retail investors with access to complex investment strategies, contribute to the automation of portfolio management processes, and reduce dependence on human participation. Algorithmic systems enable dynamic risk management, automatic asset rebalancing, and the formation of diversified portfolios based on investors’ individual risk profiles. Based on the analysis of data from rating agencies in the United States and Germany, differences in the allocation of equity and debt instruments for investors with different levels of risk tolerance were identified. The evolution of robo-advisors from RAs 2.0 models with partial human control to RAs 4.0 systems using self-learning artificial intelligence was examined. The study also identified the features of pure and hybrid robo-advising, user adaptation issues, and the importance of investor education for increasing trust in automated systems.

Conclusions – the findings confirm that robo-advisors form new models of investment behavior among retail investors, strengthen investment discipline, reduce behavioral biases, and expand access to financial services. The integration of artificial intelligence and machine learning technologies creates favorable conditions for the further development of personalized investment strategies and the growth of the digital investment services market.