AI can help with financial advice — but beware the risks
It’s super-fast and great at condensing complex issues – but you should use it with caution,
The latest version of the Microsoft Edge browser suggests using its built-in AI, Copilot, to “think through your finances”.
That’s part of a trend as more and more people turn to AI to do financial and investment research.
It can certainly help. The financial world is full of jargon that is, at best, hard to understand and, at worst, meaningless.
Professional regulated financial advice is expensive, and many independent financial advisers — which should be the best option — will not accept new customers with less than £100,000. Some now set the bar at £250,000 in investable assets.
So it’s natural that around a third of adults say they have used AI for investment advice, and a similar number say they would in future.
The younger you are, the more likely you are to trust it. More than half of those under 45 say they would follow its advice.
But beware.
Although AI can help with basic research, it must be seen as an inexperienced research assistant — albeit a lightning-fast one.
AI technologies are designed to please you, and that is one reason for their “hallucinations” — making up a plausible-sounding answer that is completely untrue.
That means everything AI produces must be checked, especially if financial decisions are being made.
One way to do that is to ask for the source of any information and then check that source independently, because AIs can — and do — make sources up too.
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AI is useful — but should be treated cautiously
I asked an AI some basic investment questions and its answers were a good start.
In particular, it warned against foreign exchange (Forex) investing, reporting that most people lost money.
One thing AI is remarkably good at is summarising long and complex documents, which can bog you down when you start delving into investment.
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But always be aware of its bias towards agreeing with you. If your questions indicate you want to go in one direction, it will lead you further down — or up — that garden path.
Advice from AI isn’t regulated. If it gives you bad advice that means you lose money, you will not be able to complain or get compensation.
But even regulated advice about honest investments does not provide compensation if you lose money.
So use AI — but with great caution.