Robinhood is no stranger to controversy. From suspending trading during the 2021 meme stock rally to paying a record $70 million fine for misleading customers and outages, the online brokerage has faced its fair share of criticism. Now, the company’s decision to outsource trading through intelligence-gathering agents could open the door to further scrutiny.
In May, Robinhood announced it was rolling out a new feature to its free stock trading app that would allow investors to automate trades — among other functions — using AI.
AI’s track record in providing financial advice remains spotty, and there’s a general distrust of how the technology handles sensitive data. So although the agent trading features may be pioneering, they require many caveats.
What AI can (and can’t) do for investors
Since the first public stock markets in the early 1600s, investment decisions have been clouded by human emotions. Although agent trading aims to remove that from the equation, it is not a crystal ball.
“People want a money printing press,” said Josip Rupena, CEO of Milo, a crypto-backed mortgage lender in Miami. “They think [AI] he can do all the work for them. They don’t have to watch you, and they’ll get all their time.”
Robinhood has stopped making those claims, but the company says on its website that its agent trading tool offers “a world of opportunities to optimize and automate your trading,” including the ability to analyze your holdings, rebalance your portfolio and execute trades on your behalf.
But it involves more than just handing over the keys and giving the AI full autonomy. Robinhood’s agent feature relies on rules-based functionality where users provide conditions for the technology to execute using their accounts.
According to Robinhood, that might include an instruction to create a portfolio using “anonymous tickers across the AI supply chain,” change a trading strategy to buy $100 worth of stocks every time their price drops 2% in a single day, rebalance holdings so no single stock has a weight of more than 20%, or analyze market data to make this a bull.
Robinhood is not alone in its AI ambitions. In February, the medium-sized crypto exchange Coinbase issued agency wallets. That feature allows users to “equip agents with independent fees, leads and minute trading capabilities with built-in protections” for crypto trading, according to its announcement. (Robinhood trading is currently limited to stocks and exchange-traded funds, or ETFs.)
However, the success of agent trading is highly dependent on AI establishing trust with investors who are willing to share vulnerable information – something many people have been reluctant to do.
A recent Credit One Bank survey found that while just over 1 in 4 consumers have sought financial advice from an AI-powered app or chatbot in the past year, only 20% have made important financial decisions based primarily on AI recommendations.
AI agents like Robinhood mark the next evolution. While bots are designed to follow fixed rules and answer questions, AI agents are autonomous and objective. They can think, plan and perform tasks in different fields without human intervention.
“These agents have historically been considered bots,” Rupena said. “Now, you have to have a way to see if they’re legitimate for real intent.”
Trust in AI is building among younger users
Currently, the ability of a trading agent to buy and sell orders on behalf of investors is a head turner. But Rupena says he believes we could eventually see AIs working with financial services companies — such as mortgage lenders, banks, wealth management firms and tax service providers — in full money management.
That would require widespread adoption and establishing trust at a faster pace than we see today, with security concerns a major obstacle. Credit One Bank found that 36% of US consumers cite data privacy as their top concern for using AI in financial planning.
“As humans, are we going to trust them with all our financial information? It seems like we’re already in pieces,” Rupena said. “But will the next iteration be that these agents will know more about us financially than we do, have more data so they can give us better financial advice?”
For younger generations, the tide is already turning. Credit One Bank research also showed that more than 1 in 3 millennials have sought financial advice from an AI tool, while 65% of respondents believe that Gen Z is the generation most likely to trust AI over human advisors.
That belief resonates with Robinhood’s core demographic: emerging investors who are still growing, digitally. The average age of a Robinhood user is 35, and millennials and Gen Zers make up more than 75% of the more than 25 million funded accounts on the platform.
But whether agency stock trading is worth that trust remains to be seen. Rupena says she believes that if it seems better than humans, we should – in theory – give it control. Actually, there are reasons to tread carefully because it involves your wealth.
“There’s real money behind it,” he says. “If it works, that’s amazing.” We all want that. But if it doesn’t happen, who is to blame?”
