From writing cover letters to writing academic papers, generative artificial intelligence (AI) programs are transforming the way business is conducted, including in financial planning.
And for millennials and Gen Zers on a budget, AI could be a ticket to simple personal finance advice.
In fact, Intuit – the company behind Mint and TurboTax – recently indicated that it was trying to make financial planning more accessible by incorporating generative AI into its software.
“Not everyone is born with the financial literacy to know how to research and ask the right questions,” recalls Nhung Ho, vice president of AI at Intuit, whose team spearheaded the company’s new generative AI operating system, GenOS.
“What we try to do is reach out to people by allowing them to ask questions in their own words, which the program can use to connect them with the best advice and the best ways to move forward. »
Although complex generative AI systems are new to the world of financial planning, AI has been a big part of personal finance services for nearly a decade, points out Alberto Rossi, professor of finance and robotics consulting at Georgetown University in Washington, D.C.
He believes financial aggregators like Mint — which tracks customers’ bank accounts to help manage their budgets and cash flow — that emerged in the early 2010s are something of a predecessor to today’s GenOS-like programs.
“As technology evolved, (companies) started to realize that a large part of the market was devoid of financial advice,” says Rossi. Specifically, people who couldn’t really afford a human financial advisor because they didn’t have the assets to pay for them. »
Software vendors then began to move in two directions. Developers either sought to produce fully automated systems or designed hybrid programs where consumers received initial advice via AI – only to later seek more specific help from a human advisor.
“Oftentimes what people really need is advice on how to avoid making the biggest mistakes, like leaving money in your savings account while credit card debt accrues interest,” he observes. Once these fixes are made, we’re essentially 90% of the way there. »
Ms. Ho echoes Mr. Rossi’s views, emphasizing that Intuit is not looking to replace human financial advisors, but rather is looking to use them to fill the knowledge and advice gap.
“It’s not about reducing human interactions, but rather about increasing the quality of those interactions,” she says. So instead of paying a financial planner up front, users can save money and time by using generative AI for much of their research and necessary preliminary advice that a financial planner would likely charge a significant fee for.
“AI systems are great, but they’re not always 100% perfect – so that’s where you have to pair them with someone who has years of expertise in the field so you can take the next step and act on the advice that the AI has given,” Ho adds.
While it’s not yet clear whether robo-advisors can make financial planning more inclusive, Rossi observes, he believes it’s important that these programs be designed in a way that ensures individuals are willing and able to disclose the information needed to get helpful advice.
In particular, “informal financial information” – such as the volatility of an employment status or the average life expectancy of one’s family – may be easier to obtain through one-on-one interactions with a human advisor whom the client thinks they can trust, as opposed to an unknown AI program.
“People can be very shy about their financial information,” Rossi notes, “so what people need is a holistic robo-advisor who takes the big picture into consideration, and is able to get that picture based on the types of questions they ask and how they ask those questions. »
Perhaps most important when considering which financial AI to use is how the software protects and uses the data, Rossi believes. He cautions against software developers who may use personal information (such as age or gender) to market specific products through the advice they generate — such as promoting one bank’s line of credit over another as paid advertising, under the guise of unbiased “advice.”
Ho also stresses the importance of doing your research before choosing a personal finance AI. Consumers should be careful to be sure they are using a generative AI specifically designed for financial planning, rather than any old chatbot.
“Data privacy is extremely important, but it’s also important to understand that not all generative AI systems are created equal,” she cautions.
“What we don’t want to see is people who don’t already have good access to financial resources start using systems that give them terrible advice and put their data at risk – so it’s not just a financial literacy issue, it’s also a data literacy issue.” »
