Recently, the paper Traditional Investment Advisors and Robo-Advisors: Substitutes or Complements?, co-authored by Lu Xiaomeng, Associate Research Fellow at the Survey and Research Center for China Household Finance of our institute, together with collaborators Wang Yibing (King’s Business School, King’s College London) and Wu Weixing (School of Finance, Capital University of Economics and Business), was officially published in the 10th issue of Management World in 2023.

Investment advisors are important participants in the capital market. How to coordinate the development of traditional investment advisors and robo-advisors has long been a focus of discussion across sectors. Using survey data covering 96,313 individual stock investors from 16 securities companies nationwide between 2018 and 2021, this study examines the substitutional and complementary relationships between traditional and robo-advisors from two perspectives.

In terms of client coverage, the two exhibit a gradual substitution effect: the age distribution of clients served by robo-advisors and traditional advisors has increasingly overlapped. In terms of service outcomes, they play a complementary role: robo-advisors are more effective at improving investors’ objective investment returns, while traditional advisors better satisfy investors’ subjective psychological needs.

Mechanism analysis shows that robo-advisors perform better in enhancing investors’ financial literacy and reducing behavioral biases, thereby boosting investment returns. Traditional advisors, by contrast, deliver better-than-expected experiences and better fulfill psychological demands such as trust and communication, leading to higher subjective satisfaction among investors.

This paper provides a new perspective for understanding the relationship between traditional investment advisors and robo-advisors in China.