Finance Internal Seminar: Christoph Merkle and Charline Uhr

Presenter: Christoph Merkle, AU

Title: Investor Acceptance of AI Financial Advice

Abstract: Generative artificial intelligence (AI) can combine personalized financial recommendations with low marginal costs, but its usefulness depends on investors' willingness to rely on it. We study investor acceptance of AI relative to human financial advice in two incentivized experiments (N=2,722). In Experiment 1, using financial lottery choices, participants are more satisfied with AI recommendations and more likely to follow them. This AI appreciation partly reflects recommendation content, as AI provides safer advice that participants prefer. Experiment 2 uses repeated portfolio-allocation decisions and instead shows modest AI aversion in advice following. Human recommendations are now closer to investors' unaided allocations, and the AI-human difference disappears once recommendation content is accounted for. Across both experiments, negative outcomes affect responses to advice, but investors do not punish AI more strongly than human advisors. Overall, AI acceptance depends importantly on what AI recommends and how well the advice aligns with investor preferences.

Presenter: Charline Uhr, AU

Title: The effect of financial advice on stock market participation and investments: Evidence from a bank terminating its advisory function

Abstract: We study how financial advice affects stock market investment by exploiting the unexpected termination of an advisory service. Following the termination, affected investors reduce their stock market investment and become more likely to abandon actively managed funds or leave the stock market altogether. The reduction in stock market investments and actively managed persists among investors who remain with the financial institution, indicating that they extend beyond customer attrition. Responses vary strongly with investors’ willingness to bear risk but little with financial literacy, gender, or age. Our findings suggest that financial advice affects stock market investment not only through recommendations but also by supporting investors’ willingness to bear risk.

Organizers: Stefan Hirth and Mads Markvart Kjær