Conservatives endorse Fintech? Individual regulatory focus attenuates the algorithm aversion effects in automated wealth management

Algorithm aversion, which is a widely observed phenomenon, suggests that customers prefer human advisors over robo-advisors in automated wealth management. Studies have shown that prevention-focused (vs. promotion-focused) customers refuse high-tech products; therefore, algorithm aversion should be more pronounced among them. However, our findings challenge this notion. Drawing on the regulatory focus theory, through four studies, we discovered that (1) customers' mindset was relatively more prevention-focused when using robo-advisors and relatively more promotion-focused when using human advisors; (2) perceived flexibility mediated this effect; and (3) the algorithm aversion effects existed in automated wealth management, but vanished among prevention-focused customers because of the fit effects. Our findings identified a psychological boundary condition of algorithm aversion, provided a novel antecedent variable of regulatory focus, and provided managerial implications for robo-advisory firms’ market segmentation strategies.