Artificial intelligence has become part of our daily lives, and many younger users are turning to it for help with managing their money.
Research by Fidelity International found that more than a third of 18- to 34-year-olds use AI when making investment choices.
AI tools are useful for “opening access”, said MoneyWeek, for those who may not understand investing or just want to check financial information. But there are limits on “how good AI is at giving advice”.
Analysis by consumer watchdog Which? found that AI tools can “make mistakes, misread information and even give risky advice”. That means relying on it too much “could prove costly”.
Seek basic financial education
Many people “feel shame” about their lack of money knowledge, said Moneybox’s director of personal finance Brian Byrnes in The Independent. AI can help “remove this barrier” and assist with “translating and explaining complex finance jargon into plain English” without any judgement.
AI can also be useful for “getting a better understanding of financial topics”, said NerdWallet, such as basic information on budgeting, estate planning or insurance.
Don’t rely on AI for tailored financial advice
Despite the access to information, said Byrnes, you should “never rely on these tools for actionable financial or tax advice”.
Analysis by Which? found that AI tools can come up with “glaring errors”, such as getting the ISA allowance wrong, and they may provide “incomplete advice”.
More importantly, AI tools aren’t regulated to give advice, and won’t know your goals, your tax position, your time horizon or how you actually feel about risk. Crucially, “it can’t take responsibility if the guidance is wrong”, unlike a regulated financial adviser, said MoneyWeek.
Double-check information
AI tools can “sound confident even when they’re wrong”, said MoneyHelper, so you should always check information against “trusted sources”.
It is best to view AI as a “well-meaning but sloppy assistant”, said Fidelity International: “eager to please you but potentially happy to take shortcuts”.
Don’t give away sensitive information
There are also data and privacy risks with AI, as your information may be stored, and personal data could be misused, said MoneyHelper. As a result, it is wise to “keep anything sensitive to yourself”, including account details.
You wouldn’t hand over credit card details to a stranger, said Byrnes in The Independent, so “take the same approach when you are thinking about your personal financial information online”.
Many people are turning to AI for financial advice but there are questions over the reliability of its responses
