Vet Your AI Financial Advice: Mixed Results, Rising Risks
Curious about using AI for your money questions? New research shows that while many turn to AI financial advice, outcomes are varied, highlighting the critical need to understand its limitations and vet every recommendation.
Artificial intelligence is quickly becoming a go-to source for money questions, but new research shows its advice comes with significant risks. A recent NerdWallet study found that while over a quarter of Americans (26%) now use AI for financial guidance, the results are decidedly mixed. For every person whose finances improved, another saw their situation get worse, highlighting the critical need for users to verify the information they receive.
The Appeal and Pitfalls of AI Advice
It's easy to see the appeal of asking a chatbot about your finances. Nearly 28% of users turn to AI because they want a non-judgmental, private space to ask questions they might be embarrassed to ask a human advisor. The problem, however, is that AI can be agreeable to a fault. It often aims to please the user, which means it might not challenge flawed assumptions or point out risks in a financial plan.
The quality of the advice you get is also heavily dependent on your ability to ask the right questions. This creates a confidence gap, as the same NerdWallet research found that nearly half of Americans (49%) do not feel confident in their ability to evaluate the reliability of AI financial advice. This uncertainty can lead to costly mistakes if the AI’s guidance is taken at face value.
User Strategies and Expert Recommendations
Savvy users are learning to treat AI as a research assistant, not a financial planner. One user, John Scukey, notes that he uses AI as a starting point but always conducts further research, especially when the bot provides contradictory information. This approach is echoed by cybersecurity professional Aaron Carlson, who calls AI a "great tool" but warns users not to let it "do your homework for you."
Experts agree that verification is non-negotiable. Sara Rathner, senior credit cards expert at NerdWallet, advises users to fact-check any information and question whether the AI is sourcing its answers from reputable websites. This is especially critical given that a concerning 1 in 5 people who followed AI financial advice acted on it immediately, without asking follow-up questions or doing any additional research.
The Next Frontier: AI Agents Spending Your Money
The stakes are getting higher as AI evolves from an information source to an active financial tool. A new wave of technology known as "agentic commerce" now allows AI agents to be given direct access to your bank accounts and credit cards to make purchases on your behalf.
Several major companies are already in this space. ChatGPT can now connect to accounts across more than 12,000 financial institutions, and platforms from Visa and Mastercard allow AI agents to compare prices and complete purchases without human input. Even Robinhood has developed a credit card that gives AI its own virtual card number to execute transactions for a user. While security systems monitor these agents for unusual behavior much like they do for credit card fraud, public trust will ultimately depend on the technology's track record for accuracy.
Conclusion: How to Safely Use AI for Finance
Using AI for financial queries can be a helpful way to brainstorm ideas or understand complex topics, but it should never be your final authority. To protect your finances, it’s essential to treat AI-generated information with healthy skepticism and a commitment to verification.
Here are the key takeaways for safely using AI:
- Treat it as a starting point. Use AI to gather initial information or explore different financial strategies, but don't stop there.
- Always verify the information. Cross-reference the AI’s answers with trusted financial sources like government websites, established financial news outlets, or a certified financial professional.
- Ask follow-up questions. Challenge the AI. Ask for its sources, inquire about potential risks, and prompt it for alternative viewpoints.
- Never share sensitive personal data. Avoid inputting account numbers, Social Security numbers, or other private information into a public AI chatbot.
Ultimately, vetting AI financial advice is not just a suggestion—it's a crucial step to safeguard your money and ensure your financial decisions are sound.