Financial planning, for everything from your first home to retirement, may often be an intimidating experience for the average consumer.
And with the rise of artificial intelligence (AI), many are now starting to seek financial advice from AI sources such as ChatGPT, DataRobot, Domo, and countless others. Experts are sounding the alarm about overreliance on these tools.
“People seem to recognize AI’s ability to run complex calculations and scenarios while still wanting human interpretation and guidance,” the report reads.
Wealthtender, a financial discovery platform, found that most consumers regularly use online resources, including AI, to compare financial advisers before deciding whether to hire one. The survey also discovered that today’s consumers are comfortable with advisers themselves using AI tools in helping them to plan for their futures.
However, the report indicates that most respondents were uncomfortable with AI making automated investment decisions without direct human oversight, with 45 percent saying they would be comfortable with this.
Jay Zigmont, certified financial planner and founder of Childfree Trust in Tennessee, told The Epoch Times that his company is currently developing an AI program to assist with life and financial planning for childless couples or individuals.
“There will always be clients willing and able to buy our services, but well-trained AI will be able to give specialized feedback, financial planning, and behavioral coaching at a much lower price point,” he said.
Zigmont cautions that people need to be aware of the right questions to ask, so AI can generate a proper investment and tax plan.
“The challenge with AI right now is that it is giving ‘generic’ advice,” he said. “It may not fit the client’s situation.”
For example, his clients include those 25 percent of Americans who are child-free. But unless AI receives specific questions about the clients’ personal situation, it may just provide general advice that may not be appropriate for that client.
Zigmont believes that the best way to use AI in finance is as an educational tool with the understanding that it does not consider individual circumstances.
A survey of its customers found that more than 50 percent trust humans more than AI with creating a retirement plan, asking financial questions, creating a savings plan, and providing financial tips.
Even young Americans seem to prefer the human touch over AI, with 54 percent of both Gen Z and millennials choosing to work with a flesh-and-blood financial adviser.
Robert R. Johnson, chairman and CEO at Economic Index Associates in New York City, agrees that while AI can provide initial information, it should never replace a human financial adviser.
“The biggest advantage of utilizing an adviser is that when the market exhibits volatility, the adviser can reassure the client that they are on the right path,” he told The Epoch Times.
“My belief is that the greatest contribution of an adviser is to explain why a certain strategy is correct and to talk the individual off the ledge in times of market turmoil. And that is the biggest disadvantage of relying on an AI application.”
Randy Carver, president and CEO of Carver Financial Services in Ohio, believes that AI is helpful in analyzing data and organizational information but lacks the necessary human qualities.
“Where it falls short is exactly where the real value of an adviser begins: understanding people,” he told The Epoch Times. “AI can’t replace the trust, judgment, and emotional support that comes with sitting down with a client and really knowing their goals, fears, and life circumstances.”
Carver believes that the focus should be on the human side of planning, especially when it comes to helping clients remain calm when markets are shaky.
“Use AI as a helper,” he said, “not a replacement.”
The Wealthtender report shows that 97 percent of Americans plan to interview multiple financial advisers, and 96 percent will do even further research to make a hiring decision. Their online research includes client reviews, awards, and the advisers’ reputation. Areas of specialization and fee structure also ranked high among those surveyed.
Northwestern Mutual found that outside of the financial services industry, a majority of U.S. adults admit they don’t trust AI exclusively for a wide range of tasks, including driving cars, teaching classes, umpiring baseball games, providing health care and child care, and producing artwork, books, or music.
