Can robo-advice spur stock market participation?

Title: Can robo-advice spur stock market participation?

Author: Sebastian Scheurle, Goethe University

Abstract: I conduct a field experiment where 45,000 customers are invited by their online bank to use a newly launched robo-advice tool. Users have to answer a series of questions on investment preferences and then obtain recommendations for a diversified portfolio of securities that match their investment goals. Recommendations are free of charge and products of large issuers with lower fees are preferred. I find that attention to the robo-advice tool significantly increases stock market participation among those individuals from my sample who could successfully be contacted compared to individuals who did not receive the message. I provide ancillary evidence suggesting that one underlying cause is reduced participation cost through robo-advice.