Surreal illustration symbolizing financial delegation and the motives behind trusting others with investment decisions.

Delegate or Dominate? Uncovering Why We Trust Others With Our Finances

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Reese Marlowe in Business & Economy December 2025 • 4 min read.

"Is handing over the reins of your investment decisions a sign of savvy outsourcing or a costly avoidance strategy? Delve into the surprising motives behind financial delegation and how to make it work for you."


In the complex world of finance, a critical question arises: Why do some investors choose to delegate their financial decisions to supposed experts? The traditional view suggests that only the wealthy, burdened by substantial fees, would consider such delegation. However, the rise of modern trading platforms like eToro and ZuluTrade has democratized access to expert assistance, prompting a broader range of investors to consider handing over the reins.

This shift raises essential questions about investor behavior and the underlying motivations behind delegation. Are investors seeking genuine expertise, or are they driven by other factors, such as avoiding responsibility or chasing fleeting success? Understanding these motives is crucial for both investors and financial professionals to navigate the ever-evolving landscape of financial decision-making.

To shed light on this complex issue, a recent study delved into the motives behind financial delegation, employing a laboratory experiment to disentangle four potential drivers: chasing past performance, blame-shifting, reducing decision costs, and increasing risk tolerance. The findings offer valuable insights into the psychology of delegation and its implications for investor welfare.

The Four Hidden Motives Behind Delegating Your Finances

Surreal illustration symbolizing financial delegation and the motives behind trusting others with investment decisions.

The research pinpoints four key motivations that influence an investor's decision to delegate financial tasks:

The study's methodology involved a laboratory experiment with nearly 600 investors drawn from the Prolific subject pool. Participants were tasked with deciding whether to delegate real-stakes lottery choices to a previous investor, an "expert," after reviewing performance data on several available experts. This controlled environment allowed researchers to isolate and analyze the impact of each potential motive.

  • Chasing Past Performance: This motive is rooted in the belief that past success predicts future returns. Investors may delegate to experts who have recently achieved high profits, hoping to ride their "hot streak."
  • Blame Shifting: Delegation can serve as a shield against potential regret or criticism. By entrusting decisions to others, investors can deflect blame if things go wrong, avoiding personal responsibility for losses.
  • Reducing Decision Costs: Navigating the complexities of financial markets can be daunting. Delegation offers a way to offload the burden of research, analysis, and decision-making, saving time and mental energy.
  • Increasing Risk Tolerance: Some investors may feel more comfortable taking risks when delegating, either because they perceive the expert as having superior risk management skills or because they feel less personally accountable for the outcome.
The experiment yielded several key findings that challenge traditional assumptions about financial delegation. First, a surprisingly large fraction of investors delegated even trivial choice tasks, suggesting that blame-shifting plays a significant role. Second, a larger fraction of investors delegated more complex tasks, indicating that decision costs also influence delegation decisions. Finally, some investors who delegated chose low-quality experts with high earnings, suggesting a tendency to chase past performance. Surprisingly, no evidence supported the notion that delegation makes risk more acceptable.

Takeaways: How To Navigate Financial Delegation

The research highlights the importance of understanding the motives behind financial delegation. While genuine expertise can be valuable, investors should be wary of chasing past performance or using delegation as a way to avoid responsibility. By carefully considering their own risk tolerance, decision-making capabilities, and the qualifications of potential experts, investors can make more informed choices about whether and how to delegate their financial decisions, ultimately improving their financial well-being. This means being diligent and cautious when engaging with any financial platform and remaining proactive even while trusting outside advice.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

Everything You Need To Know

1

What are the primary motivations that drive investors to delegate their financial decisions?

The research identifies four key motivations: 'Chasing Past Performance,' where investors believe past success predicts future returns; 'Blame Shifting,' which allows investors to avoid responsibility for losses; 'Reducing Decision Costs,' by offloading the burden of research and analysis; and 'Increasing Risk Tolerance,' although the study found no evidence to support this. These motivations reveal the psychological factors influencing delegation decisions, impacting investor behavior and outcomes.

2

How does 'Blame Shifting' influence an investor's decision to delegate financial tasks?

The 'Blame Shifting' motive allows investors to deflect responsibility for poor investment outcomes. By delegating to an expert, an investor can avoid the personal regret or criticism associated with losses. This psychological protection is a significant factor, as the study found that a surprisingly large number of investors delegated even simple tasks, suggesting that avoiding blame is a powerful motivator.

3

Why is 'Chasing Past Performance' a potentially risky strategy when delegating financial decisions?

Delegating based on 'Chasing Past Performance' involves choosing experts based on their recent high profits, assuming these experts will continue their winning streak. However, past performance is not always indicative of future returns. This can lead investors to select low-quality experts, potentially resulting in losses. Investors should be cautious and avoid solely relying on past performance when making delegation decisions.

4

How does the study's methodology contribute to understanding the motivations behind financial delegation?

The study employed a laboratory experiment with nearly 600 participants, using real-stakes lottery choices. Participants were asked to delegate to an expert after reviewing performance data. This controlled environment allowed researchers to isolate and analyze the impact of each potential motive, such as 'Chasing Past Performance', 'Blame Shifting', 'Reducing Decision Costs', and 'Increasing Risk Tolerance'. The experiment's design enabled the researchers to draw conclusions about investor behavior in a controlled environment, providing insights into the psychology of delegation.

5

What practical steps can investors take to make informed decisions about financial delegation?

Investors should carefully consider their own risk tolerance and decision-making capabilities. They should be wary of solely relying on past performance and recognize that delegation can be used for 'Blame Shifting'. Additionally, it is crucial to thoroughly evaluate the qualifications of potential experts and financial platforms before delegating any financial tasks. Being diligent and proactive, even while trusting outside advice, can improve financial well-being.

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