Article by Phil
According to Lloyds Banks over 50% of people say that they’ve used Artificial Intelligence (AI) to help them with financial planning decisions. Especially Chat GPT.
The main uses were:
- Help with budgeting
- Setting savings goals and plans
- Financial education
- Comparing company performance
- Pension advice
- Investment recommendations
- Help with taxes
- Calculating loan and mortgage payments
It is undoubtedly a great thing to have a resource like AI at your fingertips. Especially when its free to use.
But some of these questions about pensions and investments are ones which really require advice based on your personal circumstances. It’s important to remember that AI is not regulated. It offers no protection if you make the wrong decisions based on the information it provides.
50% using AI also seems a bit high to us. Thinking about my circle of friends I’m not sure half are trusting their financial planning decisions to AI. There is probably an age bias in these results.
AI is not accurate yet
Financial education specialists Investing Insider have looked at the “advice” provided by Artificial Intelligence solutions when it comes to financial planning matters. The results show that AI is currently far from the finished article. Asked a series of questions across a number of finance areas, the researchers found that AI was only right 56% of the time. 17% of the time it gave a wrong answer and 17% of the time the answers were potentially misleading.
In a number of areas AI provided out of date figures for tax rates and incorrect rates for benefits for example. Everyone seems to be rushing to AI as a trusted source, but this research shows that’s not the case. It’s important to keep a human touch. Chartered and Certified Financial Planners will always look at your individual circumstances when recommending solutions. AI struggles with this because it relies on generic algorithms for its answers.
Social media is also not accurate either
As we know social media is not the place to go to get financial planning help and guidance. This is where scams lurk around every corner.
Debt advice company Money Wellness has just looked at the accuracy of information being provided online in terms of personal debt. It found that a massive 65% of “advice” it found on TikTok and Facebook was inaccurate. That’s two thirds. Or, put another way, only a third of the information out there was accurate. Pich of salt territory I’d suggest.
Lots of the information provided was product led. Promoting one solution, probably for financial gain. Often there were no warnings about the risks involved with particular debt management strategies. Crucially Money Wellness found that 98% of the influencers online had no financial qualifications at all. They also found that 95% of the information referred to any third party validated sources for its credibility. Really worrying.
But AI has lots of uses in financial services
One of the main uses for AI currently in financial services, is as a note taker. Client conversations are now being recorded and the AI technology used to write up the notes of the meeting. Creating a record but also helping to provide the information for the client report. This can also be used to type up recommendations, saving valuable advisor time.
Some advice firms are even suggesting that clients who don’t want to use AI to records their meetings, may have to pay an additional fee because it will take the advisor longer to deal with the. You’ll be happy to know we have no plans to introduce this!
Some services will become cheaper
We are already seeing the benefits of AI in reducing costs. A number of investment Apps have come to market using AI to manage client investment portfolios. Doing tasks like rebalancing portfolios. But this does still require an initial level of professional advice input. Where this isn’t included the various protection of the Financial Ombudsman Service fall away. So, the risk needs to be balanced.
It will work well for some people, but there will always be others who want the ability to talk to an advice professional face to face. Especially where holistic advice is being provided across the whole range of a client’s financial goals and requirements.
Get more information.
If you need advice on financial planning then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
