Why Retail Investors Want AI as a Tool, Not a Replacement

Artificial intelligence has become a permanent fixture in finance, but its role in guiding retail investors is still up for debate. A recent national survey suggests Americans remain cautious about letting algorithms shape their investment strategies — and the data paints a clear picture of why human advisors still matter.

A Divided Trust in AI-Generated Guidance

Lansons, working with Opinium, surveyed 2,000 US adults at the end of 2024 to understand how comfortable they are with AI in wealth management. Only three in ten respondents said they trust AI-driven recommendations, even as financial firms adopt the technology at a rapid pace.

The hesitation isn’t about rejecting technology entirely. Instead, investors seem more open to AI as an additional tool — not the primary voice in decision-making. While two-thirds of planning firms either use or plan to use AI soon, only a quarter of individuals believe it could outperform a skilled human advisor in managing portfolios.

Lessons from Robo-Advisors

Freepik | Robo-advisor usage, which surged after 2008, has recently declined, particularly among high-net-worth investors.

The survey’s findings reflect patterns seen before. Robo-advisors surged in popularity after the 2008 financial crisis, only to see interest taper off in recent years. Among high-net-worth investors holding $500,000 or more, usage dropped from 38.3% in 2021 to just 14.5% in 2022.

This decline highlights an important reality: automation can be efficient, but it doesn’t replace personal relationships built on trust, context, and understanding of a client’s full financial picture.

Where AI Finds Its Place

Investors do acknowledge AI’s potential benefits. According to the survey:

– 36% believe AI could help level the field between professionals and everyday investors.
– 40% see it as a way to expand access to alternative assets.

However, these possibilities haven’t yet translated into mass adoption. Only 26% would be more inclined to invest on an AI-powered platform, while 40% said they would avoid it.

Gender differences were notable too. Men were more likely to trust AI advice (34%) compared to women (22%), and the same pattern appeared in willingness to use AI-enabled platforms.

Concerns About Market Impact

The conversation around AI isn’t just about trust — it’s also about market behavior. Forty-two percent of respondents worry AI could create a “herding effect,” where multiple systems make similar trades, potentially increasing volatility.

Research from the National Bureau of Economic Research adds another layer, suggesting AI trading algorithms might unintentionally collude, harming competition and pricing accuracy. About one-third of investors also believe that as AI becomes more common, any competitive edge it offers will fade quickly.

Why Human Advisors Still Hold Ground

Freepik | Better financial advice emerges from a blend of human insight and AI efficiency.

Industry experts stress that while AI can process data at remarkable speed, the human element remains irreplaceable. Emotional intelligence, behavioral coaching, and the ability to interpret personal circumstances go beyond what a system can replicate.

Deloitte has pointed out that efficiency and personalization are valuable, but real trust is built through human connection. Morningstar analysts echo this, saying advisors who clearly define their value — blending financial expertise with emotional guidance — are best positioned in a technology-driven market.

As Joe Agostinelli of Morningstar put it during last year’s Investment Conference, wealth management works best when it balances both the numbers and the emotions behind them.

AI as a Partner, Not a Replacement

The survey shows a clear trend for retail investing. AI is becoming a permanent tool, but most people see it as support, not a leader. Investors like that it can scan large amounts of data quickly and spot patterns. Still, they turn to human advisors to explain results, give context, and offer guidance during uncertain moments.

For now, the best results come from a mix of human judgment and AI’s speed. Technology handles the heavy data work. Advisors bring trust, strategy, and personal insight. Together, they can offer stronger and more balanced financial advice.