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Artificial intelligence (AI) has become a powerful, everyday tool, but should you trust it with your financial future? A recent study shows that 66% of Americans have used AI to seek financial advice. But while there is potential for AI to assist in your research, it’s important to be cautious of some real risks.

In this episode of Money Wisdom, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® discuss the ideal role of AI in financial planning.

Where AI Fits and Where It Falls Short

If you find AI helpful, it can have a place in your digital toolbox for answering quick financial questions. However, we caution against using AI as a replacement for customized advice. Financial planners provide guidance tailored to your specific phase of life, goals, and circumstances. This is an area where AI often falls short.

Think of it this way: AI can generate answers, but you must know how to ask the right questions. An experienced advisor knows which questions matter and how to effectively interpret the answers.

Knowledge Is Not the Same as Wisdom

AI generates answers based on the information it’s trained on, meaning sometimes it provides inaccurate or biased responses. While it excels at retrieving knowledge, it does not excel at imparting wisdom. Knowledge is knowing financial facts, whereas wisdom is understanding how to apply those facts to your own life. That kind of wisdom comes from years of experience.

Additionally, since AI doesn’t understand empathy or emotional intelligence, it cannot grasp what money means to you personally. So, if you use AI, use it to gather information, but let a human professional apply it.

How to Use AI Responsibly in Your Financial Life

Beyond its lack of empathy and personal context, AI can’t be a fiduciary. A fiduciary is legally and ethically required to act in your best interest—an obligation a computer cannot uphold. AI also has privacy concerns, especially if you’re entering personal financial data. Before relaying sensitive information, consider where that information will live and how AI will use it.

Ultimately, be aware of AI’s limitations and use it responsibly. AI tools can be a great starting point in your research, but don’t rely on it for a final answer. Make sure to verify AI-generated responses with reputable sources or with a trusted professional.

Interested in building a simple, actionable plan for your retirement and investment success? Get your free Money Map book by texting “MAP” to 800-757-0436.