Abstract
In <b>Who Is Better at Investment Decisions: <i>Man or Machine?</i></b>, from the Winter 2020 issue of <b><i>The</i></b><b><i>Journal of Wealth Management</i></b>, <b>J. P. Harrison</b> and <b>S. Samaddar</b> (both of <b>Georgia State University</b>) examine whether robo-advisers construct better-performing portfolios than human advisers. Using a simulated contest between a top-rated robo-adviser and prominent human advisers, Harrison and Samaddar observed that the human advisers produced higher returns (even after fees) and advice that was tailored to the ages and investment amounts of hypothetical clients. By contrast, while the robo-adviser tailored advice based on the hypothetical investors’ self-declared risk tolerances, it was insensitive to age and investment amount. The findings challenge the conventional wisdom that robo-advisers can serve customers better and at lower cost than their human counterparts. <b>TOPICS:</b>Manager selection, portfolio construction, portfolio theory, wealth management
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