FACTORS INFLUENCING AI AND HUMAN ADVISOR DECISIONS IN THE INDIAN FINANCIAL MARKET: A RETAIL CONSUMER ANALYSIS

Abstract

Purpose – This study aims to examine the factors influencing Indian retail investors' preferences, trust, and decision-making when choosing between AI-driven and human financial advisors. It focuses on how perceived opportunities and threats affect the intention to use AI-advisory services in the context of India's rapidly digitalizing financial landscape.

Design/methodology/approach – The research uses a cross-sectional survey design, collecting data from 145 Indian retail investors through an online structured questionnaire. A two-step Partial Least Squares Structural Equation Modeling (PLS-SEM) approach is applied to analyze the influence of perceived opportunities (e.g., cost-effectiveness, convenience, personalization) and perceived threats (e.g., lack of trust, data privacy threats, limited human interaction) on adoption intentions.

Findings – The results show a significant positive relationship between perceived opportunities and the intention to use AI-advisors, while perceived threats have a significant negative impact. Younger, financially literate male investors (aged 20–35, postgraduate level, and earning ₹75,000+ per month) are more likely to adopt AI-advisory platforms. The study also highlights the potential of AI-advisory tools to enhance financial inclusion in India.

Research limitations/implications – The study is limited by its sample size and geographic scope, which may affect the generalizability of the findings. Future research could explore longitudinal data or include a more diverse respondent pool across regions and financial backgrounds.

Practical implications – Insights from this research can help financial institutions, fintech startups, and policymakers tailor AI-advisory services to better align with consumer expectations, particularly by addressing trust and privacy threats. It also emphasizes the need for regulatory frameworks to ensure responsible AI deployment.