IMPACT OF AI-POWERED FINANCIAL ADVISORY SERVICES ON RETAIL INVESTOR RETURNS

Abstract

The proliferation of artificial intelligence (AI) in financial services has fundamentally transformed how retail investors access advisory services and make investment decisions. This study investigates the impact of AI-powered financial advisory services on retail investor returns, addressing a critical gap in the empirical literature on fintech adoption and investment performance. Using a quantitative research design, data were collected from 250 retail investors in Pakistan who actively use AI-based financial advisory platforms. A structured questionnaire with validated Likert-scale items was administered, and data were analyzed using IBM SPSS Statistics 26.0, employing Pearson correlation and simple linear regression analyses. Results demonstrate a statistically significant positive relationship between AI-powered financial advisory service usage and retail investor returns (r = .682, p < .001). The regression model explained 46.5% of the variance in investor returns (R² = .465), with AI advisory services emerging as a significant positive predictor (β = .682, t = 14.67, p < .001). Reliability analysis confirmed strong internal consistency for both constructs (Cronbach’s α > .84). These findings underscore the transformative potential of AI-driven tools—including robo-advisors, algorithmic portfolio optimization, and machine learning-based recommendation engines—in enhancing retail investment outcomes. The study contributes to the growing body of fintech literature and provides practical implications for financial institutions, regulators, and individual investors seeking to leverage AI for superior portfolio performance.