Who is and isn’t using robo-advisers?
Robo-advisers are designed to make investing cheaper and more accessible, yet New Zealanders with lower financial capability and less investment experience are among the least willing to use them.
That's the key finding from new AUT research, published in the Journal of Behavioral and Experimental Finance, which surveyed nearly 1,000 New Zealand adults about their attitudes to robo-advice.
The study was conducted by AUT Business School researchers Sara Ali, Aaron Gilbert and Sommer Kapitan, who examined how financial capability, investment experience, psychological comfort, and social influence shape people's willingness to use robo-advice.
Robo-advisers are digital services that use automated systems to recommend or manage an investment portfolio. They generally cost less than traditional financial advice and can allow people to begin investing with smaller amounts.
The researchers identified six distinct groups of potential users. At one end were the "Financially Confident" - experienced investors who were the most willing to use robo-advice. At the other were the "Financially Vulnerable" - people with the lowest financial capability and investment experience, who showed very low willingness to use it.
"There's an uncomfortable irony here," says Dr Sara Ali. “These tools are intended to make investment guidance more accessible, yet the people who could benefit most are also among the least willing to use them."
The researchers say two factors stood out across the different groups:
- Feeling safe matters. People were more willing to consider robo-advice when they felt secure, confident, and in control.
- Communication matters. Information about robo-advice from social media, online reviews and news was associated with a greater willingness to consider using it, including among people with the lowest financial capability.
Dr Ali says the second finding is particularly important when considering how to reach people who may be less willing to use robo-advice.
"Clear information from credible and trusted sources may help make unfamiliar financial technology feel less intimidating, especially for people who do not know where to start. But it is also a double-edged sword, because online financial content can come from unlicensed or unreliable sources,” says Dr Ali.
The authors caution that the same online spaces where robo-advice is more accessible can also expose people to misleading claims, hidden advertising, and scams. These are issues that regulators in both New Zealand and Australia are already scrutinising.
Dr Ali says the findings show that simply providing cheaper, more accessible digital advice is not enough on its own to broaden uptake.
Financial institutions and policymakers need to look beyond technology and focus on building financial capability, increasing people’s comfort with these services, and ensuring that information about them is clear and trustworthy.
Practical steps could include:
- Explain how robo-advisers work in plain language, including how recommendations are made, what fees apply and what risks investors are taking.
- Provide access to trusted human support, particularly when people have questions or face more complex financial decisions.
- Use trusted financial and community voices to provide accessible education, including through online channels, while maintaining clear disclosures and safeguards against misleading content.
“The real opportunity is to make sure robo-advice reaches people who have traditionally found investing too expensive or intimidating,” Dr Ali says. “Otherwise, we risk leaving the same people behind.”
The research was supported by an AUT Business, Economics and Law contestable research grant. The authors have no financial interest in any robo-advice provider or product.
Read the article in Stuff: AI is coming for your wallet. Will you let the right one in?
Useful links
AUT supports the role our academics play as critic and conscience of society, as set out by the Education and Training Act 2020.
Our approach to academic freedom and freedom of expression is set out in our Charter of Academic Freedom which was developed and endorsed by the AUT academic community.