More and more people now take their money questions to an AI tool before they ask anyone else. This is understandable, considering that it is patient and available at any hour. It has also read more about personal finance than anyone ever will.

They can explain a term you came across in a statement and help you to understand the important factors when you need to make a big decision. This can save you time and help us to spend more of a meeting on your unique circumstances. Many of our clients use these tools well and often arrive at meetings better prepared than before.

But good information was available long before these tools were developed. Books, articles, and rules of thumb have been available to investors for decades, but we still see many people make financial mistakes that can cost them in the long run.

In our experience, it is investor behaviour, not knowledge, that determines the financial outcomes of families.

Understanding the Limitations

An AI tool answers the question you ask, using what you tell it. We naturally ask about whatever is on our mind at the time, which is not always what needs to be addressed first.

For example, we regularly meet with prospects who want to know which fund to choose, when there are more urgent matters to address, like setting aside cash for emergencies, protecting the breadwinner’s income, or drafting new Wills. In these situations, we act as a thinking partner, helping to frame the questions better.

Sometimes, rather than an answer, we need someone to say, “I don’t think that is what’s really worrying you”.

The bridge from facts to a decision involves many steps, and most financial decisions involve weighing up trade-offs. For example, helping your children now against protecting your own independence later. And sometimes the right answer is to do nothing.

A tool can lay out the trade-offs clearly, but we believe the judgment to weigh them is still best made with someone who has sat with many families who have made similar decisions.

Some of the biggest financial mistakes are made when markets have fallen. At those times, a friendly face who can honestly say, “It’s not different this time”, may be what stands between many investors and a life-defining decision. An AI tool reasoning about facts and market valuations may not have the same influence.

Where We Come In

These tools aren’t going away, and they will probably keep getting better. For people who have always preferred to do it themselves, these tools are a big step forward.

But knowing what to do was never the hard part, so better answers alone won’t fix it. What helps is someone in your corner who helps you to stick to the plan. If you have always wanted help, they can support the work we do together, but they won’t replace it.

Part of our job is to pick up the phone when something changes in your plan, or when a decision we made together at your last review is getting harder to stick to. And we’re accountable to you for the advice we give.

The next time you ask an AI tool a money question, keep both the question and the answer, and bring them to your next review. It is a good place to start a conversation, and one we would be glad to have with you.

Risk warnings

This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.