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Sustainable Investment Preferences among Robo-Advisor Clients
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.ORCID iD: 0000-0003-1287-8411
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.ORCID iD: 0000-0003-4394-4020
2022 (English)In: Sustainability, E-ISSN 2071-1050, Vol. 14, no 19, p. 12636-, article id 12636Article in journal (Refereed) Published
Abstract [en]

The increasing role of individual investors in supporting the achievement of sustainable development goals through sustainable investment has gained growing interest from financial authorities and the research community. Digitalization in the financial sector, e.g., robo-advisors, enables lay-investors to make sustainable investments in a simple and convenient way. This study investigates whether investment-related attitudes and demographic profiles are related to robo-advisor clients' sustainable investment choices. This paper describes an empirical study that uses a logistic regression model to investigate sustainable investment preferences at the individual investor level. Cross-sectional data consisting of 27,771 individual investors in Sweden, Norway, and Finland, who purchased investment products through a robo-advisor application, are used in this study. The results suggest that, concerning investment-related attitudes, robo-advisor clients with low-risk tolerance and a short investment horizon are more likely to choose to become sustainable investors. Furthermore, sustainable investments are preferred by robo-advisor clients who are less wealthy, female, and older.

Place, publisher, year, edition, pages
MDPI AG , 2022. Vol. 14, no 19, p. 12636-, article id 12636
Keywords [en]
sustainable investment, robo-advisor, digital wealth management, risk-return preference, investment horizon, sociodemographic factors
National Category
Economics and Business Human Computer Interaction
Identifiers
URN: urn:nbn:se:kth:diva-320680DOI: 10.3390/su141912636ISI: 000867345300001Scopus ID: 2-s2.0-85139780258OAI: oai:DiVA.org:kth-320680DiVA, id: diva2:1707254
Note

QC 20221031

Available from: 2022-10-31 Created: 2022-10-31 Last updated: 2023-05-09Bibliographically approved
In thesis
1. Understanding individual investors’ preferences and knowledge of sustainable investments
Open this publication in new window or tab >>Understanding individual investors’ preferences and knowledge of sustainable investments
2023 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis aims to contribute to the field of sustainable investment by investigating individual investors’ preferences and knowledge level of sustainable investments. To achieve this objective, this thesis examined the impact of investment-related attitudes and demographic characteristics on sustainable investment choices through secondary data analysis and assessed investors’ knowledge level regarding sustainable investments through a survey. Both the secondary data and the survey used individual investors in Nordic regions as the sample.  The data analysis was performed using logistic regression and ordinary least square regression methods. The results show that risk-averse investors and investors with shorter investment horizons were more likely to choose sustainable investments. In terms of sociodemographic characteristics, sustainable investments were preferred by older, female, and less wealthy clients. Furthermore, after understanding the characteristics of individuals with sustainable investment choices, this thesis measured the knowledge level of sustainable investors and examine the relationship between investors’ knowledge level and information-seeking and advice-seeking behavior. The findings suggest that most sustainable investors had high objective financial literacy but scored low in sustainability knowledge and even lower in sustainable finance literacy. Sustainable investors search for information more actively when they have a high perceived knowledge compared to their actual knowledge. In evaluating advice-seeking behavior, it was discovered that sustainable investors who perceive themselves to be more financially literate are more likely to receive advice on sustainable investments from financial advisors. Yet, those who saw themselves as having greater sustainability literacy were less inclined to consult their financial advisors before making sustainable investing decisions. In regards to product literacy, this study found that the key information about the dark green fund, with the highest sustainable disclosure requirements, was not easy to understand compared to the ones with lower requirements. 

Abstract [sv]

Denna avhandling syftar till att bidra till tidigare forskning om hållbara investeringar genom att undersöka enskilda investerares preferenser och kunskap om hållbara investeringar. Avhandlingen redovisar två studier som undersöker effekten av konsumenters investeringsrelaterade attityder och olika demografiska egenskaper samt olika typer av finanskunskap vid val av hållbara investeringar. Data i den första studien beskriver enskilda investerare i Norden. I den andra studie genom en enkät, i båda fall. Dataanalysen utfördes med hjälp av logistisk regression respektive OLS-regression. Resultaten visar att riskaverta investerare och investerare med kortare investeringshorisonter är mer benägna att välja hållbara investeringar. När det gäller sociodemografiska egenskaper föredrog äldre, kvinnliga och mindre förmögna kunder hållbara investeringar. Dessutom undersöktes sambandet mellan kunskapsnivån hos konsumenter som valt hållbara investeringar och deras informations- och rådgivningssökande beteende.

Resultaten antyder att de flesta konsumenter med hållbara investeringar hade en hög objektiv finanskunskap, men låg hållbarhetskunskap och ännu lägre kunskap om hållbara investeringar. Konsumenter som valt hållbara investeringar söker efter information mer aktivt när de har en hög egenupplevd kunskap jämfört med faktisk kunskap, dvs när de överskattar sin förmåga. Vid utvärdering av ett rådgivningssökande beteende upptäcktes att investerare som uppfattar sig själva som mer ekonomiskt kunniga är mer benägna att söka råd om hållbara investeringar från finansiella rådgivare. De som såg sig själva som mer kunniga inom hållbarhet var däremot mindre benägna att rådfråga sina finansiella rådgivare innan de fattade beslut om hållbara investeringar. När det gäller produktkunskap om olika testade hållbara investeringsalternativ, visar resultaten att nyckelinformationen om fonden med högst hållbarhetskrav (den mörkgröna fonden) var svårare att förstå än information om fonder med lägre hållbarhetskrav. 

Place, publisher, year, edition, pages
Stockholm: Kungliga Tekniska högskolan, 2023. p. 32
Series
TRITA-ABE-DLT ; 2324
Keywords
sustainable investments, risk-return preference, investment horizon, financial literacy, sustainability literacy, sustainable finance literacy, product literacy, information-seeking behavior, advice-seeking behavior, hållbara investeringar, risk-avkastningspreferenser, investeringshorisont, finanskunskap, hållbarhetskunskap, kunskap om hållbar ekonomi, informationssökande beteende, rådsökande beteende
National Category
Social Sciences
Research subject
Business Studies
Identifiers
urn:nbn:se:kth:diva-326685 (URN)978-91-8040-587-4 (ISBN)
Presentation
2023-06-08, E2, Osquars Backe 2, KTH Campus, https://kth-se.zoom.us/s/67572051180, Stockholm, 15:00 (English)
Opponent
Supervisors
Note

QC 230509

Available from: 2023-05-09 Created: 2023-05-08 Last updated: 2023-05-10Bibliographically approved

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Faradynawati, Ida Ayu AgungSöderberg, Inga-Lill

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