More and more people are relying on artificial intelligence (AI) chat tools for some or all of their financial planning needs. Of course, this is risky because chatbots can provide inaccurate, inconsistent, or biased information while lacking regulatory oversight, deep contextual understanding, and data privacy protections.

This guide explains what financial professionals can communicate to clients and prospects who are considering using AI to manage their finances.

The Doctor Corollary

Many of your clients likely use AI to learn about simple medical issues or to do initial research about conditions they could have. However, most sensible people turn to a medical professional for a final diagnosis and treatment. They wouldn’t go it alone using advice from AI to cure a serious — or even benign — medical condition. The internet is too full of bogus healthcare information. In addition, AI recommendations tend to be generic and not based on specific medical histories, allergies, or other personal issues.

The same is true for using AI for financial planning. Sure, you can get reasonable financial advice from AI chat. But is it completely accurate? And is it tailored to the individual investor’s needs? Likely not.

This comparison between using AI for medical advice and financial support can help you explain to prospects and clients why leaving wealth management to artificial intelligence can be risky.

Here are some other points you can make to prospects and clients about why they need to work with a human wealth manager.

Empathy

AI can seem human to some people, however it is anything but. It is unable to provide support and understanding during challenging transitions like the death of a parent or spouse or a divorce. It cannot comfort people during challenging market conditions and keep them focused on their ultimate investment dreams and goals.

Managing finances can seem cold and calculating, but it’s also about human understanding and empathy. Remind clients they deserve human partnership to help them achieve their dreams and goals.

Life Changes

Life is changing constantly. Unexpected events, both positive and negative, happen all the time. Divorce, inheritance, a death, or windfall can happen with little or no warning. That’s why it’s smart to work with a financial professional and keep them on speed dial. Remind prospects and clients that they never know when they’ll need personalized advice and counsel to get through challenging times.

Coaching

Artificial intelligence can provide information, but few people know what to do with it. It’s like getting a diet or exercise plan online. It may provide direction, but most people won’t follow through or stick with it. That’s the value a financial advisor can deliver to clients. They can help make sense of information accessed through AI and beyond, refine or refute it, execute on it, and keep clients focused and on track to achieve their financial goals.

Specific Advice

Does AI really understand humans as individuals? Definitely not.

It cannot address individual human anxieties, hopes, personal nuances, and family dynamics. In short, it delivers cookie-cutter insights and advice that could work for anyone. Some people care more about today. Others are focused on the future. Some people are confident investors; others are more reticent. Remind people that when they work with you, they will get financial guidance tailored exclusively to their needs, feelings, dreams, and concerns.

Accountability

Financial professionals are highly regulated and must act in clients’ best interests. AI is not regulated and is beholden to no one. Remind clients that AI does not take responsibility for errors.

Privacy

Financial firms take steps to protect their client’s data and privacy. Explain to prospects and clients that AI chat systems offer no such protections. Highlight the data-security risks of sharing sensitive personal financial information with public AI tools. Typing private account numbers, income details, or tax data into a chat window risks exposure because public AI tools lack financial-grade encryption and strict data privacy protocols. Conversations and uploaded financial documents may be saved and processed to train future AI versions, leaking nonpublic personal data. This alone should be enough to talk clients and prospects off the AI cliff.

Tax Optimization

How much someone pays in taxes on investment returns and transactions can be as important as how much they earn. AI may be able to deliver some reasonable investment and broader financial advice. However, platforms and tools aren’t sophisticated enough to layer in the tax implications of different investments. And most investors don’t know enough to prompt AI to provide insights about optimizing taxes on investment returns, trades, or distributions. Explain to clients how much they could lose if they don’t address taxes properly.

Estate Planning

Estate transfer is one of the most complex and personal areas of financial planning. It takes close coordination among family members, financial professionals, accountants, and lawyers to get it right. While AI may help someone write a basic will or understand the steps to put together a power of attorney, it’s smart to advise clients and prospects that using AI exclusively for estate planning could put them and their families at risk.

Timely Adjustments

Sometimes set-it-and-forget-it is the best investment strategy. However, in highly dynamic markets, it can be smart to have someone on call to advise you on how to manage changing market conditions. AI is not that. In fact, in changing markets, AI is unlikely to have the information needed to advise someone through a financial crisis. Only a financial professional has the experience and dynamic thinking capabilities to navigate changing market conditions.

Complete and Accurate Advice

Studies show popular AI models give widely varying, incomplete, or flawed recommendations on asset allocation and portfolio withdrawals. Ask your clients and prospects: “Do you use artificial intelligence to help with other aspects of your life? How often does it provide incorrect or slightly off information?” The answer should give them pause for relying on AI for investment management advice.

Genuine Confidence

Chatbots write with absolute authority, which can make bad or mathematically unsound suggestions sound completely true. Explain to prospects and clients that they can feel genuine confidence about advice supplied by a financial professional because it has been researched, tested, and verified. Unlike a Chatbot, they can explain how they reached their conclusions.

Nuance

AI cannot feel empathy or fully grasp complex, high-stress human realities like unexpected job losses or family dynamics. And even though wealth management can seem cool and calculating, emotion plays a big role in achieving success. Addressing emotions early in the planning process ensures that clients set goals that are genuinely meaningful to them. Acknowledging feelings during challenging periods makes it less likely clients will do anything rash that could harm progress toward their goals. A machine definitely cannot do that.

Hallucinations

Even AI companies admit their programs can give wrong answers because of the algorithm’s hallucinations. Responsible financial professionals don’t hallucinate; they find errors and issues before they happen. Ask your clients whether they are willing to entrust their money to software that has self-identified issues.

Prompts

AI is sensitive to how users write their prompts. Small differences in input can lead to great variation in its recommendations. By contrast, financial advisors can ask clarifying questions to ensure they understand what prospects and clients say and ask. Clear communication is a hallmark of excellent planning and wealth management.

Talking Clients Off the AI Planning Cliff: The Final Word

AI can be a first stop for people seeking financial advice, but after that, a lot can go very seriously wrong.

ChatGPT and other AI information services can serve as a starting point for finding and giving financial advice, but a professional should carefully scrutinize and assess its recommendations and in the end provide the best recommendations and service for their clients. Leverage the talking point in this guide to talk clients off the AI planning cliff.

Got questions about growing your business during this period of extraordinary change? Schedule time with Dan Sondhelm to discuss what’s on your mind.