AI has been heralded as both the harbinger of doom and the foreteller of greatness as its popularity has gained a foothold in dozens of industries. AI has become a useful tool for businesses, with automation, customer support, and even content generation among its uses.
But does it have a place in the financial domain of wealth generation, advice and money management?
All financial advice comes with risk. This risk does not differentiate between human or AI-generated advice. However, some factors might make AI intriguing/attractive to you.
The cost of face-to-face financial advice is rising, as well as a decrease in trained professionals available to assist., creating gaps for the average Australian regarding access and availability. AI has been flagged as a potential means that financial advisors could create affordable and accessible planning services to suit the average Australian looking for advice.
While AI might not be able to fill the gap of human interaction, it may be able to assist in broaching the other gaps. AI could be used, for example, to facilitate fact-finding about the individual seeking advice via an algorithm. These facts are important for creating comprehensive, personalised financial advice that best suits the individual’s circumstances.
There have also been attempts to use AI to create investment strategies for stocks or shares, in the hopes that it can predict patterns (for example). For example, an AI tool could be used to analyse financial data, such as balance sheets and income statements, from technology companies. It could identify patterns that might indicate opportunities or problems. An investor could then adjust their portfolio, potentially increasing returns or even just helping to reduce exposure to certain risks.
AI could also be used to build an investment portfolio tailored to an individual’s specific investment goals and risk tolerance. Using information based on your preferences, such as your current financial situation and risk attitude, for example, the AI could generate a customised portfolio that accounts for the level of return you’d like to make and the kinds of risks you’d like to avoid.
While some may experience success in using AI for their own personal situation, you need to be wary of the potential risks that could arise from using it for wealth-creation purposes.
There are several factors that AI tools may not be able to account for, such as unexpected events or changes in market conditions, as well as human behaviour. The intricacies of human language and misunderstandings that may arise from prompts given to the AI could lead to incorrect or misleading information.
There is also a need for greater transparency about how these tools make decisions, including the privacy and security of the personal information that must be fed into AI systems, as well as the potential for bias.
While AI has capabilities, it may still be some time before they replace human advisory services for financial advice. From ChatGPT itself:
“As an AI language model, I can provide general financial information and guidance, but it is best to consult a licensed financial advisor for specific personal finance questions.”
And if you want specific financial advice on how to grow your super, contact our award-winning superannuation experts today here.