31% of investors are OK with using artificial intelligence as their advisor


Nearly 1 in 3 investors would use artificial intelligence as their financial advisor, a new survey suggests — and that has the potential to lead to flawed advice, experts said.  

Specifically, 31% of investors queried would be comfortable implementing financial advice from a generative AI program without first verifying those recommendations with another source, according to a poll by the Certified Financial Planner Board of Standards, the body that governs the CFP designation for financial advisors.

“It is a bit concerning,” said Kevin Keller, CEO of the CFP Board.

In simple terms, AI is technology that aims to simulate human intelligence. Generative AI uses algorithms to create new content like essays, song lyrics, art, photography and computer code — or, in this case, financial advice.

ChatGPT, a program that went viral after being debuted to the public late last year, is one example of generative AI.

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Would-be financial-advice recipients can use such programs to ask financial questions or prompts.

Consider this sample prompt from Keller: “Create an asset allocation for a 62-year-old male investor who is moderately risk tolerant.”

The algorithms that underpin generative AI compile data from sources like the internet to develop responses, and those data sources may not be reliable. The quality of the results depend on the quality of the model, according to McKinsey & Co.

“The outputs aren’t always accurate — or appropriate,” the consulting firm wrote of generative AI.

“For its part, ChatGPT seems to have trouble counting, or solving basic algebra problems — or, indeed, overcoming the sexist and racist bias that lurks in the undercurrents of the internet and society more broadly,” it added.

In short, financial advice outputs won’t necessarily be 100% trustworthy.

Of course, technology and algorithms aren’t new for investors — nor is the skepticism surrounding that technology.

So-called robo-advisors, which use algorithms to automate asset allocations for investors, began popping up around the time of the 2008 financial crisis. They’ve grown in popularity, inspiring questions as to whether they can deliver advice on par with human financial advisors.

Investors — especially those with relatively complicated financial lives — a face an additional hurdle with AI: Engaging with it becomes difficult if someone doesn’t know what questions to ask in the first place, wrote Michael Kitces, a CFP and head of planning strategy at Buckingham Wealth Partners.

“Have you tried logging into ChatGPT to ask it questions only to find yourself sitting there wondering, ‘What should I ask an AI chatbot?’ Kitces said. “Now imagine that feeling again, but this time you have to ask it the right question because your financial life savings are on the line.”

It’s the Wild West out there.

Kevin Keller

CEO of the CFP Board

Perhaps counterintuitively, young investors seem more wary about AI outputs than older investors: 62% of investors age 45 and older said they were “very satisfied” with getting financial advice from generative AI, versus 38% of investors under 45, according to the CFP Board poll.

Yet older investors — who may be in or near retirement — are generally the ones with more complex finances and in need of more tailored advice, experts said.

Ultimately, there have always been do-it-yourself investors, and there will continue to be, Keller said. Those who leverage AI for financial advice should “trust but verify,” he said.

“It’s the Wild West out there,” he added.



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