Half of Consumers Trust AI to Help With Financial Planning. Should You?

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Generative AI is opening up all sorts of new possibilities, but it also has its limitations. Here’s what you need to know before taking its financial advice. 

Pretty much everyone has heard about ChatGPT and other AI platforms that can answer questions, write stories, and synthesize data almost instantaneously. While the technology is still fairly new, it’s clearly here to stay, and its capabilities will likely only grow with time.

The possibilities are exciting, but we also need to exercise caution with how we use this new technology. That’s especially true for the 53% of consumers who said they trust generative AI to assist them with financial planning, according to a recent Capgemini Research Institute survey. Here are a few things you should know before you go sharing the details of your financial life with an AI chatbot.

AI doesn’t always get it right

One of the first things you’ll notice when using ChatGPT or any other generative AI tool like it is a disclaimer telling you that the technology doesn’t always get information right. These language models are trained off existing data written by humans and use this to string together sentences that sound natural. But sometimes they don’t actually make sense.

These incorrect answers are known as hallucinations, but they’re not always easy to spot, especially if you’re unfamiliar with the topic you’ve asked the chatbot about. Generative AI always sounds confident in its responses, but it’s up to you to determine whether the information it gives you is actually sound.

Those who hope to use AI to help them make financial decisions should consider it a jumping-off point. Note what it recommends, but then verify this with other credible, human-written sources. This will help ensure you’re not missing any critical information or basing your decisions on an AI hallucination.

AI doesn’t always know what’s happening right now

Generative AI’s knowledge depends on the data its creators trained it on, and that doesn’t always include current events. ChatGPT, for example, is only trained on data through 2021 and knows nothing about things that have happened more recently.

This is important to be aware of when using AI to guide your financial decisions. Some financial decisions, like where to keep your money, depend a lot on current market conditions. And if the AI doesn’t know what those are, it might not give you the best advice.

Comparing its suggestions to what knowledgeable humans have said on the same topic can help you avoid falling into this trap. Educating yourself about the current economic conditions could also help you spot flaws in the AI’s logic.

You don’t know who’s seeing your data

Generative AI is still in its infancy, and its developers are keen to improve it. One of the ways they do this is by analyzing the content of conversations that users have with the chatbots to identify common mistakes and opportunities for improvement. Companies like ChatGPT claim to anonymize your data, but it’s still best to avoid giving out too much personal information.

Don’t share your Social Security number or your financial account numbers with a generative AI chatbot. And avoid giving out too much other personal information, like your exact address. In most cases, you shouldn’t need this to get help with most of your financial questions anyway.

Know its limitations

It would be great if we could hand off our complex problems to an AI that understands exactly what we want and delivers tailor-made responses. But we’re not there yet. AI is a tool, and like most tools, is only useful if you know how to use it.

Understanding the limitations of generative AI can help you tailor your prompts to provide more accurate information and recognize when something’s gone amiss. But if you want truly personalized financial advice, asking a human is still your best option. You can start by seeking out financial advice from sites like The Ascent. Or you can look up financial professionals, like Certified Financial Planners (CFPs), in your area who can provide guidance specific to your situation.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More