Consumer acceptance of online pension investment advice

In their efforts to meet the demand for personalized pension solutions, pension fund managers seek to accurately measure individuals’ risk preferences and to offer sound personalized investment advice — both tasks increasingly provided with the aid of online technologies. Relatively little is known, however, about what drives individuals’ acceptance of online pension investment advice and, from a consumer point of view, which firms may be best placed to provide such advice. The aim of the current paper is to generate novel insights that shed light on these questions by conducting (1) a review of the current literature and (2) a ‘real-world’ empirical study using an innovative online pension investment advice tool (the ‘Pension Builder’) and applying this to a representative sample of the Dutch population. The goal of our literature review is to draw up a comprehensive framework of online pension investment advice acceptance that rests upon three main sets of drivers: characteristics of firms, of interactions, and of consumers. In the empirical analysis, we focus on one of these three components that has received relatively little attention in the literature to date, and we highlight the role that different firm characteristics – namely profit orientation (for-profit vs. not-for-profit) and independence (pension product provider vs. intermediary) – have on acceptance of online pension investment advice by the consumer. Based on the literature review and our empirical study, we find that besides the essential role of the quality of the consumer-firm interaction process, trust in the firm and perceived firm expertise are important drivers of online pension investment advice acceptance, and that these constructs themselves are strongly influenced by firm characteristics.