\tKey Takeaways<\/p>\n
Americans are increasingly using AI chatbots for everyday financial guidance.<\/p>\n
In a recent JD Power financial health survey of 4,000 people, 40% said they had used AI to manage their money in the previous three months.<\/p>\n
AI chatbots fall short in nuanced situations; one of the central risks of using AI for financial guidance is that the tool can confidently hallucinate, or invent sources and information.<\/p>\n
Turning to AI for financial advice<\/a>? You\u2019re not alone. However, experts urge caution when tapping into the technology for consequential decisions.\u00a0<\/p>\n Finance experts recently told NPR<\/a> that AI tends to be useful at two extremes. On the one hand, it can handle basic finance questions<\/a> reasonably well. On the other hand, it can be helpful for experienced users who know how to provide detailed personal information and write highly specific prompts.<\/p>\n The problem is that many real-life financial questions fall within a gray area somewhere in the middle. Those situations can be more nuanced, and that\u2019s where AI can get things wrong.\u00a0<\/p>\n Danielle Harrison<\/a>, founder of Harrison Financial Planning<\/a> in Columbia, Missouri, put an AI model to the test after her husband joined her firm. She asked how the two should structure the business.<\/p>\n At first, the tool was emphatic: \u201cYou need to be an S corporation,\u201d it told her, referring to a business structure<\/a> that can offer certain tax advantages.<\/p>\n But as Harrison continued the conversation and supplied more details, the AI reversed its recommendation. It ultimately said they should form an LLC<\/a> instead.<\/p>\n \u201cIf I had not had that background knowledge, it would have given me the wrong information,\u201d Harrison told NPR.<\/p>\n That is one of the central risks of using AI for financial guidance. The tool can confidently hallucinate<\/a>, or invent sources and information. It can also make flawed assumptions because it lacks key details about a person\u2019s circumstances.\u00a0<\/p>\n AI is improving<\/p>\n Sharon Bloodworth, CEO of White Oaks Wealth Advisors, which has offices in Minneapolis and Sarasota, Florida, said AI has been wrong more often<\/a> than right in her experience.<\/p>\n Still, she believes the technology will improve<\/a> and could eventually expand access to financial guidance for people who cannot afford or easily find a human adviser.<\/p>\n \u201cIgnoring it would be almost like saying, \u2018Don\u2019t pick up a calculator\u2019 or \u2018Don\u2019t get into a car, and just still ride a horse,\u2019\u201d she told NPR.<\/p>\n Many Americans are turning to AI for help with their finances. In a recent JD Power financial health survey<\/a> of 4,000 people, 40% said they had used AI to manage their money in the previous three months. More than one-third said the guidance helped them make better financial decisions, a share on par with people who said their bank\u2019s advice was useful.<\/p>\n For David Kendrick<\/a>, a 53-year-old IT manager in Dayton, Ohio, ChatGPT has become a regular part of his financial routine. He uses it so often that he has given it a nickname: \u201cChatty.\u201d<\/p>\n Kendrick has asked Chatty about everything from managing his home equity<\/a> line of credit to deciding what to do with a recent raise<\/a>. Should he use the extra income to pay down debt, or put it into his Roth IRA<\/a>?<\/p>\n Chatty recommended the Roth. Kendrick took the advice.<\/p>\n He still meets with a human financial adviser<\/a> once a year. But he says the ability to ask questions whenever they come up has eased some of his long-running money worries. \u201cThis very much helped,\u201d he told NPR.<\/p>\n \tKey Takeaways<\/p>\n Americans are increasingly using AI chatbots for everyday financial guidance.<\/p>\n In a recent JD Power financial health survey of 4,000 people, 40% said they had used AI to manage their money in the previous three months.<\/p>\n AI chatbots fall short in nuanced situations; one of the central risks of using AI for financial guidance is that the tool can confidently hallucinate, or invent sources and information.<\/p>\n Turning to AI for financial advice<\/a>? You\u2019re not alone. However, experts urge caution when tapping into the technology for consequential decisions.\u00a0<\/p>\n Finance experts recently told NPR<\/a> that AI tends to be useful at two extremes. On the one hand, it can handle basic finance questions<\/a> reasonably well. On the other hand, it can be helpful for experienced users who know how to provide detailed personal information and write highly specific prompts.<\/p>\n The problem is that many real-life financial questions fall within a gray area somewhere in the middle. Those situations can be more nuanced, and that\u2019s where AI can get things wrong.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Key Takeaways Americans are increasingly using AI chatbots for everyday financial guidance. 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