AI Knows Data, But It Can’t Make Participants’ Financial Decisions
For better or worse, AI platforms have become a go-to source for personal finance education and advice for millions of Americans.
And there’s good reason for that. Chatbots like ChatGPT, Gemini and Claude are remarkably good at providing foundational financial education in an easily digestible format. They can help investors test various “what-if” investing and savings scenarios without using spreadsheets or calculators.
But as AI use becomes more widespread, we’re learning where its capabilities end. It’s simply a recognition that AI, when used alone, can’t provide the full spectrum of support participants need for life-changing decisions—and finances certainly fall into that category.
According to a recent survey conducted by J.D. Power, 51% of Americans turn to AI for financial advice or education. Another survey from BMO found that 46% of investors who use AI for financial guidance trust these tools to help them develop their own financial plans. But here’s what’s telling: that same BMO research found that 64% of respondents who use AI for financial planning recognize that chatbots are inadequate when it comes to providing reliable personalized advice and understanding how emotions influence financial decisions.
These users aren’t anti-AI. They’re smart about it. They get that AI is a powerful starting point, but not a finish line.
This is where pairing AI with human coaching and advisory services becomes critical. Technology can help participants get started, but it’s the human connection that keeps them going. When someone feels heard and guided by a person who understands their situation, they’re far more likely to make confident, informed decisions.
Less experienced savers and investors are particularly vulnerable when relying only on AI. For many, their 401(k) plan is their sole investment vehicle. Most don’t work with a financial advisor, so they turn to chatbots for answers. And while chatbots can provide general education, they struggle when faced with individual circumstances.
The issue isn’t just about getting the wrong information, though that happens. In one study, researchers asked ChatGPT 100 questions related to finance and concluded that 35% of the bot’s answers were either misleading or factually false. People who accept a bot’s answers at face value risk making costly mistakes. An incorrect answer about the taxation of 401(k) or IRA distributions could lead to a bad contribution change or an unnecessary rollover.
Free chatbots like ChatGPT can’t be held legally accountable for their mistakes. Unlike SEC-regulated financial advisors, they don’t have to follow strict rules when presenting information. But an even bigger problem is that AI can’t provide emotional support when investors are facing a crisis of confidence. When a market downturn slashes the value of their retirement nest egg by 20% for example or juggling multiple financial priorities at once, all competing for the same bucket of savings.
At these financial flashpoints, investors need empathy and reassurance from someone who really understands their concerns and can talk them down from impulsive decisions they’ll regret later.
A new model is emerging to leverage AI’s strengths and avoid its limitations—one that holds tremendous promise for elevating the financial security of millions of people. This is where well-designed AI paired with financial coaching and fiduciary advice for those who need it, work seamlessly together. Properly trained AI tools (especially those operating on closed-loop systems using proprietary, vetted financial content rather open internet sources) can extend the reach of human coaches and advisors and prepare participants for deeper conversations.
AI helps people get started. Coaching gives them confidence and clarity to progress to financial security.
These tools are trained to recognize when users need human expertise, whether that be financial coaching or financial advice.
That’s an important distinction, because coaching and advising are not the same thing. Financial coaching provides education, guidance, and support to help people make informed decisions. Coaches help you understand your options and work through the emotional side of money decisions. But they’re not managing investments or providing formal financial planning advice. They’re getting you ready for the next level of your financial journey.
And when advice, investment management, or help with complex decisions is needed, that’s when working with a fiduciary financial advisor becomes necessary. These professionals are legally obligated to act in their client’s best interest, bringing deep expertise and personalized planning.
AI helps people get started. Coaching gives them confidence and clarity to progress to financial security. And when that moment comes, working with a vetted fiduciary advisor means they’re getting the level of expertise their situation requires.
The future of financial wellness isn’t about choosing between technology and human expertise. It’s about using both smartly, at the right times, in the right ways.
SEE ALSO:
• AI Technology ‘Key Differentiator’ Among Retirement Plan Websites
• CFP Board Predicts Future AI Financial Landscapes
Pam Krueger is the founder and CEO of Wealthramp, which helps consumers find vetted fiduciary financial advisors. She is also the creator and co-host of MoneyTrack on PBS and the Friends Talk Money podcast.
Liz Davidson is the founder and CEO of Financial Finesse, credited with launching the financial wellness industry in 1999. Her award-winning firm blends cutting-edge AI technology with live, unbiased CFP® coaching to help over 2.4 million workers nationwide improve their financial well-being and long-term security.