Why it’s important your clients don’t take financial advice from AI

The world is rapidly changing, with artificial intelligence (AI) likely becoming evermore prevalent in your clients’ day-to-day lives. It is changing the way people deal with a variety of basic tasks, such as the way they communicate, navigate, manage finances, and even seek out advice. 

Since the advent of the internet, it is likely your clients have found themselves routinely drawn online to seek answers to any pressing questions. However, as handy as the internet can be as a resource, it should be remembered how much misinformation is out there.

This problem has been compounded by the development of easy-to-use AI programs, such as OpenAI’s language model ChatGPT, which has been hitting the headlines in recent months.

ChatGPT can rapidly generate coherent and detailed responses to a vast variety of prompts and so it’s easy to see the temptation to use it to help with sourcing relevant information. However, AI still has its limitations and so it’s important your clients don’t use it to seek out financial advice.

Read on to discover why AI programmes, while impressive, aren’t suitable for seeking detailed financial advice and why it’s important for your clients to use a living, breathing financial adviser when faced with any issues. 

AI doesn’t think your clients should be taking financial advice from AI

One of the simplest reasons why your clients shouldn’t be using AI to receive financial advice is that AI doesn’t think it’s a good idea. 

In order to get directly to the point, we sought out answers directly from the horse’s mouth and asked ChatGPT a series of questions.

Our first question was simply: “Should I take financial advice from ChatGPT?”

The app very quickly came back with this response: “While I can provide general information and insights about financial topics, it’s important to note that I am an AI language model and not a certified financial adviser. 

“My responses are based on patterns and information present in the training data up until September 2021, and I don’t have access to real-time market data or personal financial information.

“If you’re seeking specific financial advice or making important financial decisions, it’s always recommended to consult with a qualified financial professional who can take into account your individual circumstances, goals, and risk tolerance. 

“They can provide personalised advice tailored to your needs and help you navigate the complexities of financial planning.

“Remember, when it comes to your finances, it’s crucial to make informed decisions based on reliable and up-to-date information from trusted sources.”

A lack of understanding of your clients’ personal circumstances

Next, we asked: “Why shouldn’t I get financial advice from ChatGPT?”

While AI can give broad responses, it is unable to understand your clients’ unique financial circumstances and goals. It is unlikely to be able to factor in the wide range of criteria that make up your clients’ current financial situation such as knowledge of their savings, investments, income, debts, financial history, and tolerance for risk. 

It won’t understand their personal goals and how their financial outcomes might affect them or their loved ones.

It is likely that any advice received will be general and may not align with your clients’ financial goals — potentially leading them astray.

Working with a financial planner ensures the advice your clients receive is carefully tailored to their personal circumstances, tolerance for risk, and long-term objectives.

A lack of detailed and up-to-date knowledge

AI programmes like ChatGPT rely on access to data to inform their insights. This helps train their algorithms and their responses. ChatGPT admits, when prompted, that its knowledge was cut off in 2021.

So, any advice the AI tries to deliver is lacking any information regarding changes to:

  • Financial markets
  • Regulations
  • Taxes
  • New investment opportunities
  • Up-to-date best practice.

It is likely that any advice rendered by AI is going to be outdated and potentially inaccurate. If your clients rely on this information to inform their decisions it might lead to costly mistakes.

An inability to understand human factors

Human beings aren’t AI. They don’t base their decisions solely on data and logic. 

Your clients are likely to be influenced by emotions and psychological biases that could affect their decision-making. An AI model is unlikely to be able to comprehend these issues. 

Read more: 3 harmful investing biases that Pantone’s colour of the year can teach you about

Working with a financial planner allows your clients access to someone who can empathise with their situation and help guide them away from potential mistakes caused by human factors and emotional impulses. 

Your clients are unlikely to form long-lasting, trusting relationships with AI, but they could do with a financial planner.

A lack of fiduciary duty

A financial planner is a regulated professional with expertise, training, and a fiduciary duty to act in the best interest of their clients. Institutions like the Financial Conduct Authority (FCA) help ensure advice is ethical and prioritises a client’s welfare over an adviser’s personal gains. 

Financial planners and advisers are ultimately held responsible for the advice they give.

However, AI — such as ChatGPT — has no obligation or responsibility to act ethically or act in a user’s best interests. AI cannot be held accountable for negative outcomes caused by poor advice.

Remember: professional advice ensures your clients are protected and can rest assured that the advice they do receive is designed with their best interests in mind.

Get in touch

If your clients are worried about their financial plans and are unsure what the next best steps might be, they might benefit from receiving professional advice. 

They should get in touch to set up a meeting by emailing mail@delaunaywealth.com or calling 0345 505 3500.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.