Financial literacy, robo-advising, and the demand for human financial advice: Evidence from Italy

This paper investigates the influence of objective, subjective, and digital financial literacy on individuals’ propensity to utilise online services for automated financial advice. Exploiting microdata from the Bank of Italy’s 2023 Survey on Financial Literacy of Italian Adults, we find that individuals with greater objective financial literacy are less inclined to rely on robo-advisory services. Conversely, subjective and digital financial literacy enhance the likelihood of utilising robo-advisors. Behavioural factors, such as trust in financial innovation, the propensity to save and take risks, and engagement with digital financial services, also emerge as significant predictors of robo-advisory usage. Furthermore, we examine the interplay between robo-advising and different forms of human financial advice. While robo-advisory services appear to substitute for non-independent human advice, our results indicate a significant complementarity with independent professional advice. These findings underscore the importance of hybrid approaches in delivering financial advisory services.