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Key Takeaways Americans are increasingly using AI chatbots for everyday financial guidance.
In a recent JD Power financial health survey of 4,000 people, 40% said they had used AI to manage their money in the previous three months.
AI chatbots fall short in nuanced situations; one of the central risks of using AI for financial guidance is that the tool can confidently hallucinate, or invent sources and information.
Turning to AI for financial advice? You’re not alone. However, experts urge caution when tapping into the technology for consequential decisions.
Finance experts recently told NPR 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.
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’s where AI can get things wrong.
Danielle Harrison, founder of Harrison Financial Planning 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.
At first, the tool was emphatic: “You need to be an S corporation,” it told her, referring to a business structure that can offer certain tax advantages.
But as Harrison continued the conversation and supplied more details, the AI reversed its recommendation. It ultimately said they should form an LLC instead.
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