The Do’s and Don’ts of Using AI for Financial Planning

Once you get more comfortable, experiment with a few different AI chatbots to see which interface you prefer, says Shane Cummings, director of technology and cybersecurity at Halbert Hargrove, a financial advisory firm in Long Beach, California.

Do use AI as a personal research assistant

“AI is really good at gathering and synthesizing data you might use for financial planning decisions,” says Cummings. For example, you could ask it to explain how compound interest works, the difference between a Traditional 401(k) and a Roth 401(k), how to create passive income streams or what constitutes a diversified retirement plan. AI can even help you create a spreadsheet that you can use to track your expenses.

Do review citations for accuracy

At times, AI may fabricate information, a phenomenon known as “hallucinating.” But a little diligence can go a long way, says Cummings, who recommends reviewing any references cited to ensure you’re getting current, accurate data from reliable sources. If your chatbot of choice doesn’t provide annotations automatically, ask it to include URLs for the information it cites.

Do remember that AI doesn’t see your full financial picture

An AI chatbot can give you a list of important things to consider before making a particular financial move, such as questions to ask yourself before selecting an executor, but it’s operating on limited information. It doesn’t know your finances in and out; it only knows when you tell it. 

As a result, AI can overlook “human elements,” like your values, goals, health and family dynamics, that could play a key role in financial decisions, says Adam Olson, a certified financial planner at insurance and financial services company Mutual of Omaha in Nebraska. ​

Don’t share sensitive information

“Generative AI platforms aren’t regulated like banks, and they don’t offer the same protections around how data is stored, used or shared,” warns Chris Powell, head of deposits and customer engagement at Citizens Bank. Keep sensitive information such as your Social Security number, driver’s license, bank account details, medical records or usernames and passwords out of conversations with chatbot.

“When people input personal or nonpublic financial information such as income details, account balances or tax data,” Powell says, “they may be exposing themselves to privacy, fraud or identity-theft risks.”

Don’t rely on chatbots to make big investment decisions

Chatbots aren’t stockbrokers, wealth managers or financial planners, so proceed with caution. “If it tells you to go buy four or five stocks and that data is incorrect, that could be really disastrous,” especially if you invest a large chunk of your retirement savings, Cummings says. Major investment decisions should be part of a carefully crafted financial plan, not rendered on advice that you received with a few clicks on your computer.

Don’t take everything they say at face value

Oftentimes, AI “sounds warm and confident, which makes it easy to trust,” says Jonathan Kolmetz, a certified financial planner and president of Oaks Wealth Management in Houston. But chatbots also don’t typically express uncertainty. The onus is on you to view its answers through an objective lens.

Don’t disregard human professionals

AI chatbots can be helpful for certain financial planning tasks, but they “can’t replace empathy, connection or accountability,” says Ramiro Marmolejo, founder of Financial Rubrics, based in . Nor can they replace the expertise of a financial adviser, accountant, retirement plan administrator or other financial professional.

“We should feel somewhat fortunate to be living in this time where we get to experience seismic change in technology and get comfortable with it," Gilham says, “but we still need those trusted relationships.”