Nearly One-Third of Investors Comfortable Employing Artificial Intelligence as Advisor
Approximately 1 in 3 investors would consider utilizing artificial intelligence (AI) as their financial advisor, a recent survey has shown. However, experts warn that this trend could potentially result in flawed advice. The survey conducted by the Certified Financial Planner Board of Standards, which oversees the CFP designation for financial advisors, revealed that 31% of participants would feel comfortable relying solely on recommendations from a generative AI program without cross-referencing the advice with another source. This growing reliance on AI for financial guidance raises concerns, according to Kevin Keller, CEO of the CFP Board. Generative AI employs algorithms to produce content, such as financial advice, but its accuracy and reliability may vary. For instance, ChatGPT, a well-known example of generative AI, has displayed limitations in counting, solving basic algebra problems, and addressing inherent biases from online sources.
The quality of advice generated by AI depends on the data sources it draws upon. McKinsey & Co. highlighted that the outputs from generative AI are not always accurate or appropriate, underscoring the potential risks of trusting such advice blindly. Despite advancements in technology and the emergence of robo-advisors, skepticism surrounding AI-driven financial guidance persists. Engaging with AI becomes especially challenging for investors who lack the expertise to ask the right questions. Michael Kitces, a CFP and planning strategy head at Buckingham Wealth Partners, emphasized the difficulty of formulating appropriate inquiries when significant financial decisions are at stake. Interestingly, the survey discovered that older investors, aged 45 and above, exhibited greater satisfaction with generative AI advice compared to their younger counterparts. However, experts noted that older investors usually possess more intricate financial situations that demand tailored guidance. While the allure of AI-powered financial advice continues to grow, experts advise a cautious approach. Keller emphasized the need to “trust but verify,” as the realm of AI financial guidance remains unpredictable and uncertain.