Finances Under Control or Driven by Algorithms? Experts Warn

October 2025 poses a question to the investment community that is simpler in form than in content: Are we keeping up with the changes that are shaping capital markets at an increasingly rapid pace? World Investor Week 2025, scheduled for October 6–12, focuses the attention of regulators and market participants on three key issues: digital technologies and finance, artificial intelligence and fraud prevention – topics that today determine how we invest and how we should learn about it.

This year's edition of WIW involves a wide range of institutions and jurisdictions; over a hundred entities from different regions of the world participate in the campaign, which highlights the scale of the challengeAnd the need for coordinated educational activities.

Why is financial education particularly important today?

Availability of modern investment tools – from robo advisors (automatic investment systems that create and manage the investor's portfolio), by fractional share trading (allowing you to invest even small amounts), platforms enabling copy trading (allowing investors to copy other investors' strategies) – changed the rules of the game. The barrier to entry fell, the range of opportunities expanded, and risks took on new, often less obvious forms.

Based on sector analyses and market observations, it can be seen that the development of financial technologies attracts new participants, but at the same time requires them to have digital competences and understand the limitations of algorithms and awareness of the decision-making risks that lie behind automationIn practice, this means that financial education today must combine classical knowledge—such as the principles of diversification and awareness of the impact of fees on profits—with the ability to critically evaluate digital tools and understand how they work.

Education isn't just about conveying definitions—it's about recognizing the pitfalls hidden beneath attractive interfaces. A person who understands the mechanics of portfolio rebalancing can also recognize when systems automatically increase concentration risk or, conversely, limit the influence of emotions.

As Ireneusz Kubies, Market Development Director for Poland at Direct Fondee, notes:

"Financial education is more than a set of concepts—it's the ability to translate information into decisions. Digital tools simplify operations, but they don't replace discernment. When an investor understands the principles, they can leverage technology rather than succumb to it."

Nuances that are often not discussed – examples and consequences

There are aspects of the market that are sometimes marginalized in popular guides, yet they have a real impact on investment effectiveness. The first example is the effect of fees and so-called "silent costs" – a small difference in commissions or the Total Expense Ratio (TER) can reduce the final investment result by tens of percent after a dozen or so years. Awareness of this phenomenon often leads to the selection of simpler, transparent, and less expensive solutions, which prove more profitable in the long run.

The second example is the backtesting trap – a situation in which an investment strategy looks great when tested against historical data, but in reality it is “tailored” to past events and fails when the market changes.

Another nuance that is less frequently discussed is "sequence of returns risk" – especially important for people withdrawing funds, such as retirees. Even with the same average annual rate of return, the order of gains and losses can determine whether the capital will suffice for the planned period. This is a practical argument for adapting the strategy not only to the investment goals, but also to the investor's stage of life.

Equally important are the issues liquidity and adjustment of the investment horizonInvesting in assets with limited liquidity and a short payout horizon creates the risk of forced realization of losses. Finally, in the area of ​​digital assets – cryptocurrencies, tokens or funds based on blockchainie —there is still a lack of widespread awareness of protocol auditing, understanding of the tokenomics model (the method of issuing and distributing tokens), and security mechanisms. Understanding these elements today requires not only financial knowledge but also technological foundations.

The phenomenon of the so-called influencers deserves a separate comment here. Short forms of content can effectively disseminate knowledge, but they can also lead to simplifications and poor decision-making.

"Rapid education in social media is valuable if it shapes habits - but if it sells the pressure of quick profits instead of showing mechanisms and limitations, it becomes a source of problems" — emphasizes Ireneusz Kubies.

What to do now – a practical perspective

The ongoing World Investor Week should be treated as a stimulus for long-term action. Financial education is a process, not a one-time campaign.

First, educational institutions and the media should provoke questions, not just provide pre-packaged answers – encouraging practical exercises, simulations, and simple risk assessments. Second, individual investors should begin by organizing their goals and horizons, verifying costs, and understanding the tools they use. Even simple, periodic portfolio exercises can teach more than one-time decisions made based on emotion. Third, the financial sector and regulators should enhance market transparency – clear communication about costs, product limitations, and the principles of algorithm operation are key elements of consumer protection today.

Against this backdrop of challenges, pragmatic awareness becomes increasingly valuable, especially in the face of volatile market sentiment. The net outflows from global equity funds in mid-September demonstrate that investors can quickly shift their behavior – and a lack of preparation increases the risk of panicky decisions in moments of uncertainty.

Wnioski

World Investor Week 2025 is a good opportunity to shift the debate on financial education from the level of buzzwords to the level of competencies. Today's education must combine classic financial principles with the ability to critically evaluate digital tools, understand the psychology of market behavior, and be aware of the nuances that define real risk. By adopting the National Financial Education Strategy for 2024–2030 in June 2024, the Council of Ministers of the Republic of Poland established a framework that should be consistently implemented through practical programs, collaboration between the public and private sectors, and the use of technology in education.

"Financial education is an investment that pays dividends in security—not only individually but also systemically. The added value of good education is that it reduces errors and strengthens society's resilience to market turmoil." — summarizes Ireneusz Kubies.

In the face of technological changes and the increasing complexity of markets, we are realizing day by day that that conscious decisions are the best protection against variability and emotionsWorld Investor Week should encourage not one-off initiatives, but sustainable programs that build skills—from schools to adult investors.

Author: Direct Fondee experts