AI financial adviser tools still need a human gut check
Researchers and planners say AI can help with money questions, but prompt quality, bias and missing context keep humans in the loop.
By Frankie Delgado · News Reporter
3 min read
An AI financial adviser may sound tempting if you want a quick answer on investing $5,000, planning retirement or setting up a portfolio. Financial-planning experts cited by MarketWatch say the tech can be useful, but it is still a risky substitute for a human adviser who can ask better questions and judge the full picture.
Researchers tested seven widely used generative AI tools for financial recommendations and found that the answers differed sharply, with possible demographic bias showing up in some results. The study looked at advice on household financial planning, emergency savings, retirement withdrawal rates and portfolio allocation, with the widest differences appearing in emergency-savings guidance and asset allocation.
Can AI replace a financial adviser?
Based on the experts cited, probably not. AI can generate financial suggestions, but sound advice depends on personal goals, risk tolerance, debts, liquidity needs, time horizon and the investments a person already owns.
Brenda J. Cude, a study author and professor emerita at the University of Georgia’s department of financial planning, housing and consumer economics, told MarketWatch that AI results depend heavily on the quality of the prompt. People with more financial knowledge are likely to get more out of the tools because they are better able to ask precise questions and judge the answers, she said.
That matters for anyone typing a broad question such as how to invest $5,000. Cude said a better prompt would include details such as risk tolerance, time horizon, current holdings, cash needs and debt level. Those are the kinds of details a human adviser is trained to gather before making a recommendation.
Cude also suggested a practical use for consumers: ask AI what questions they should ask a financial adviser. That can help investors prepare for meetings and check whether they have covered key issues.
What should investors ask advisers about AI?
For people already working with a planner, Cude said clients can ask directly how generative AI is being used. MarketWatch listed these questions from her:
- Are you using generative AI, and if so, how?
- How do you judge whether AI is working well, and can clients assess that too?
- Has AI changed your recommendations or the questions you ask clients?
Many advisers are already using AI inside their practices, according to MarketWatch. The technology can help with analytics for portfolio design, regulatory compliance, client communication, cybersecurity and fraud reduction.
Luke Delorme, a certified financial planner in Great Barrington, Massachusetts, said note-taking is one of the most common uses. He told MarketWatch that AI joins his Zoom meetings, records notes, summarizes what was discussed and drafts follow-up emails.
Delorme also tested Claude AI by posing as a healthy, single, 62-year-old woman with savings who wanted to retire at 65 and was worried about longevity and inflation. When he asked whether she should wait until 70 to claim Social Security, he said the answer was thoughtful and close to what he might tell a client, while noting that more personal data would probably improve the response.
Delorme was more doubtful about AI as a stock picker. He said a chatbot might point to stocks with strong momentum, but he did not think it would identify a specific stock to buy.
Ryan Marshall, a New York City-based chartered financial analyst, pointed to another problem: confirmation bias. He told MarketWatch that AI can give users answers that match what they already want to hear, while strong human advisers can challenge clients with recommendations grounded in a fuller review of their situation.
This story draws on original reporting from MarketWatch.