Artificial Intelligence (AI) is rapidly reshaping the financial services landscape, particularly through the emergence of AI-powered financial advisors (AFAs) that offer automated, personalized, and data-driven investment solutions. Despite the promise of enhanced efficiency, reduced human bias, and increased accessibility, consumer adoption of AFAs remains cautious and uneven, especially in high-stakes financial contexts. This study explores the underlying factors contributing to the gap between the technological potential of AFAs and their actual uptake among consumers. Drawing on insights from behavioral finance and technology adoption theories, the paper examines how psychological, perceptual, and trust-related concerns influence user attitudes toward AI-driven financial decision-making. The analysis highlights that while AFAs are designed to optimize investment outcomes through advanced algorithms and machine learning, issues such as perceived loss of control, lack of transparency, and limited understanding of AI processes hinder widespread acceptance. Evidence from early adopters, including reactions to platforms such as Wealthfront and Betterment, reveals that algorithmic opacity and the autonomous nature of AI systems can generate skepticism and resistance among users. These concerns are further amplified in financial decision-making environments where risk and uncertainty are inherently high. The study argues that successful adoption of AFAs depends not only on technological sophistication but also on building consumer trust, enhancing transparency, and improving user engagement. It emphasizes the need for financial service providers to address behavioral barriers by incorporating explainable AI features, fostering user education, and maintaining a balance between automation and human oversight. By bridging the gap between innovation and user acceptance, AFAs can achieve their full potential in transforming investment practices. Ultimately, this paper contributes to the growing discourse on AI adoption in financial services by highlighting the dual dynamics of innovation and intimidation, offering insights for practitioners, policymakers, and researchers seeking to promote responsible and inclusive financial technology adoption.
Wei Liang Zhang (Tue,) studied this question.