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Turning to AI for financial advice? You\u2019re not alone. However, experts urge caution when tapping into the technology for consequential decisions.\u00a0<\/p>\n
Finance experts recently told NPR<\/a> that AI tends to be useful at two extremes. On the one hand, it can handle basic finance questions reasonably well. On the other hand, it can be helpful for experienced users who know how to provide detailed personal information and write highly specific prompts.<\/p>\n The problem is that many real-life financial questions fall within a gray area somewhere in the middle. Those situations can be more nuanced, and that\u2019s where AI can get things wrong.\u00a0<\/p>\n Danielle Harrison<\/a>, founder of Harrison Financial Planning<\/a> in Columbia, Missouri, put an AI model to the test after her husband joined her firm. She asked how the two should structure the business.<\/p>\n At first, the tool was emphatic: \u201cYou need to be an S corporation,\u201d it told her, referring to a business structure that can offer certain tax advantages.<\/p>\n But as Harrison continued the conversation and supplied more details, the AI reversed its recommendation. It ultimately said they should form an LLC instead.<\/p>\n \u201cIf I had not had that background knowledge, it would have given me the wrong information,\u201d Harrison told NPR.<\/p>\n That is one of the central risks of using AI for financial guidance. The tool can confidently hallucinate, or invent sources and information. It can also make flawed assumptions because it lacks key details about a person\u2019s circumstances.\u00a0<\/p>\n Sharon Bloodworth, CEO of White Oaks Wealth Advisors, which has offices in Minneapolis and Sarasota, Florida, said AI has been wrong more often than right in her experience.<\/p>\n Still, she believes the technology will improve and could eventually expand access to financial guidance for people who cannot afford or easily find a human adviser.<\/p>\n \u201cIgnoring it would be almost like saying, \u2018Don\u2019t pick up a calculator\u2019 or \u2018Don\u2019t get into a car, and just still ride a horse,\u2019\u201d she told NPR.<\/p>\n Many Americans are turning to AI for help with their finances. In a recent JD Power financial health survey<\/a> of 4,000 people, 40% said they had used AI to manage their money in the previous three months. More than one-third said the guidance helped them make better financial decisions, a share on par with people who said their bank\u2019s advice was useful.<\/p>\n For David Kendrick<\/a>, a 53-year-old IT manager in Dayton, Ohio, ChatGPT has become a regular part of his financial routine. He uses it so often that he has given it a nickname: \u201cChatty.\u201d<\/p>\n Kendrick has asked Chatty about everything from managing his home equity line of credit to deciding what to do with a recent raise. Should he use the extra income to pay down debt, or put it into his Roth IRA?<\/p>\n Chatty recommended the Roth. Kendrick took the advice.<\/p>\n He still meets with a human financial adviser once a year. But he says the ability to ask questions whenever they come up has eased some of his long-running money worries. \u201cThis very much helped,\u201d he told NPR.<\/p>\n<\/p><\/div>\n Turning to AI for financial advice? You\u2019re not alone. However, experts urge caution when tapping into the technology for consequential decisions.\u00a0<\/p>\nAI is improving<\/h2>\n
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