Retail investors remain divided on AI's role in financial advice
As artificial intelligence becomes more common in financial services, a recent survey by Lansons shows US retail investors are split on trusting AI for investment guidance. Despite advances in technology, many investors still value human insight as essential to sound financial decision-making.
AI as support, not a substitute
The Lansons study, conducted with Opinium and surveying 2,000 Americans in late 2024, highlights persistent skepticism about relying solely on AI algorithms. While robo-advisors gained traction after the 2008 financial crisis, their popularity has declined sharply, especially among investors with $500,000 or more, dropping from 38.3% usage in 2021 to 14.5% in 2022.
Today, AI is more often viewed as a tool that complements human advisors rather than replaces them. Two-thirds of financial planning firms are currently using or planning to implement AI within the next year. Yet, only 28% of retail investors trust AI-generated recommendations, and just 25% believe AI could outperform a knowledgeable human in managing investments.
James Schiavone, head of operations at Lansons New York, noted: “While AI may support portfolio decisions and help generate alpha, it’s unlikely to replace the trusted relationships advisors build over time. Understanding a client’s full financial picture and applying emotional intelligence are tasks best suited for humans.”
Access and caution coexist
The survey also reveals mixed views on AI's potential to democratize investing. About 36% believe AI can level the playing field between professional and everyday investors, and 40% see it broadening access to alternative assets. However, only 26% would be more inclined to invest on an AI-powered platform, while 40% would avoid such platforms.
Gender differences are notable, with 34% of men trusting AI advice compared to 22% of women. Similar gaps appear in willingness to use AI-driven investment platforms.
David Masters, director at Lansons, explained: “AI-driven portfolio management speeds up how markets absorb information, but it doesn’t inherently create an advantage. The key is how firms apply AI strategically to serve clients.”
Market effects and the advisor’s value
Concerns about AI’s impact on market dynamics are widespread. Forty-two percent of respondents worry AI could cause herd behavior, where many algorithms make similar investment decisions, increasing volatility. A study from the National Bureau of Economic Research suggests AI trading algorithms might collude, reducing competition and pricing efficiency.
About 32% of investors believe AI’s competitive edge will fade as it becomes more common.
Industry experts stress balance. Deloitte emphasizes that while AI can boost efficiency and personalization, the human element remains crucial for trust and understanding clients’ goals. Morningstar highlights that advisors who clearly communicate their value, especially in behavioral coaching and holistic financial planning, will stand out from AI tools.
Joe Agostinelli, Morningstar’s senior director of market research, put it simply: “Wealth management is a relationship business. Combining financial expertise with emotional insight is key.”
For finance professionals interested in expanding their knowledge on AI applications in the industry, exploring specialized training can provide practical skills and strategic insight. Resources such as AI tools for finance offer focused learning to stay ahead in this evolving space.
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