By Farnoosh Torabi, personal finance expert and host, So Money
When it comes to money, we are often driven by our emotions. For some, insecurity overshadows the ability to make confident choices, while others have overconfidence that results in regrettable decisions. As a result, making the best long-term financial choices can be challenging.
This emotionally-charged relationship isn’t new but has been exacerbated by the COVID-19 pandemic.
To explore just how much the pandemic has affected our relationship with money, I teamed up with Oracle on a global survey of more than 9,000 consumers and business leaders across 14 countries. The report, titled Money & Machines, found that the pandemic has increased financial stress and anxiety among both consumers and business leaders, and people are turning to robots for help.
Over the past 12 months, many consumers have faced more worst-case scenarios than we could have imagined. Therefore, it’s no surprise that consumers’ financial anxiety and stress doubled and sadness increased by 70 percent in 2020.
Nearly 9 out of 10 (87 percent) are experiencing financial fears, the most common being losing a job (39 percent), losing savings (38 percent) and never escaping debt (27 percent).
And these fears are taking a toll on our health, with 41 percent of consumers losing sleep over their finances.
“Why don’t we learn about finances in school?”
I get this question nearly every day. According to the research, 80 percent of consumers never learned about finances in school, and more than half (56 percent) believe they’d benefit from more professional assistance.
The reality is that many people aren’t meeting basic financial benchmarks: 78 percent aren’t saving for retirement, 53 percent don’t plan or budget their money, and 47 percent don’t have a savings account.
The lack of formal education, combined with heightened anxiety from the past year, has two-thirds (66 percent) of consumers willing to trust a robot to manage their finances, and more than half (53 percent) would even trust robots over themselves. In fact, some aren’t even sure they trust the experts, with 63 percent of consumers saying they’d trust a robot more than a personal financial advisor!
AI is enhancing our financial lives in unprecedented ways, and we’re not only benefiting from it, we’re eager for more. More than 8 in 10 consumers (82 percent) believe robots will replace personal financial advisors in the coming years. According to the research, we want robots to help by freeing up time (33 percent), reducing unnecessary spending (31 percent) and increasing on-time payments (25 percent).
Personally, I love using AI-based applications to create an investment portfolio tailored to my specific goals and risk tolerance, or a chatbot that can immediately respond to questions while I’m filling my taxes outside work hours. For me, it means better investment returns and a speedier tax refund.
So, will robots upend and replace the entire finance world? Not even close.
While AI can provide unbiased data to enhance our decision-making, consumers still trust financial advisors over robots for guidance with major purchasing decisions such as buying a house (45 percent), buying a car (41 percent) and planning for retirement (38 percent).
After spending nearly two decades helping people master their money, it easy for me to see how much potential AI has in improving our financial wellbeing. Together, humans and robots can help rebuild trust in ourselves and simplify our financial lives as the consumers, investors and business leaders of tomorrow.