AAII Home AAII Blog

FinTech Faces Education Gap in Gaining Wider Adoption

image_pdfimage_print

Last week’s AAII special question asked what individual investors thought was the best feature of financial technology (FinTech) such as robo-advisors. For those who do not use FinTech, we asked what was keeping them from doing so.

Among the 205 respondents, 54.1% said they do not use FinTech, compared to 45.9% that do use it.

For those that said they do not use FinTech, the biggest reason was a lack of familiarity with the subject, with 36% (19.5% of all respondents) saying they did not know enough to use it or didn’t know what FinTech even was. Another 9% of those not using FinTech said they preferred to deal with a “live” broker or advisor and another 9% said they managed their own accounts without the use of FinTech. Lastly, 8.1% who said they didn’t use FinTech said they didn’t because they did not trust the technology or the accuracy of the recommendations generated by the services.

For those that said they did use FinTech, its convenience–either in speed, accessibility, etc.–was the best feature at 25.5% (11.7% of all respondents). Another 5.3% of those who use FinTech said they like using it because it removed emotion or subjectivity from the investment decision-making process.

Here is a sampling of the responses:

  • “It [FinTech] provides confirmation that I haven’t forgotten anything important in financial planning.”
  • “Financial technology removes the emotion from the decision making and the temptation of an advisor choosing an investment based on a higher commission.”
  • “Best feature is I don’t have to worry about a human adviser making decisions with my money that are in his/her best interest.”
  • “I’m more comfortable with my fund managers in Fidelity, T.Rowe Price, Oakmark, etc. than I am with some unknown computer programmer.”
  • “I don’t understand how it arrives at its conclusions, therefore, I don’t trust it.”
  • “I don’t trust the algorithms to be correct, and the lack of transparency and flexibility bothers me. This is based on my actual experience with real money with a robo-advisor for a period of a year–not only was the performance abysmal relative to the equivalent asset allocation of stock vs. bonds etc. and the market, the volatility was much higher! The culprit was commodities. Having said that, I might try one or two more-recent robo-advisors that seem to be more flexible. But I still trust myself more.
  • “No need and in fact dangerous. Obviously, memories of Long Term Capital are short indeed. Remember the Nobel economists who nearly brought down the world financial system based on their computerized investing? Algorithms will not replace solid research and common sense.”

And here is this week’s most unique response:

  • “I don’t need a cookbook. I cook well enough by myself.”

Want to weigh in? Participate in our weekly member poll, updated every Tuesday, and see the results online at http://www.aaii.com/memberquestion.

For nearly 40 years, AAII has been providing unbiased, practical investor education to help individuals become effective managers of their own assets and achieve their financial goals. Consider a risk-free 30-day Trial AAII Membership today.

 

One thought on “FinTech Faces Education Gap in Gaining Wider Adoption”

  1. Pingback: AAII Blog

Leave a Reply

Your email address will not be published. Required fields are marked *