While it’s true that AI might have found its way into doing certain manual tasks with perfection without the involvement of humans, financial advice is something it is still not eligible for. The reliability of AI, to a certain extent, is extremely helpful. However, intense decision-making, such as finances-related, shouldn’t be made solely based on what AI says. This guide will dive deeply into whether AI tools can become your financial advisor.
How Has AI Shaped Our Finance & Banking Sector?
As mentioned above, AI can greatly assist when used for certain tasks. The finance and banking sector has evolved a lot. Today, AI is used to do lowkey tasks at the bank, such as sending notifications to customers, SMSing services and offers, and sourcing information on the borrower’s previous debt. Investment apps such as stock trading platforms online, mutual fund investments, or IPOs.
Although AIs are game-changing tools, they are not developed enough to replace financial advisors’ knowledge, skill, and analysis skills.
Here are the top five reasons why one cannot perceive AI tools as their financial advisor:
- No personalization
What is heaven for one person who may be suffering for another? AI will tell you the general rule which might or might not suit your requirements. Only a financial advisor with reasoning and intelligence can carry out financial planning specifically for you. There’s no general rule to it. It’s supposed to be personalized based on financial goals, risk appetite, and much more that AI tools aren’t eligible to provide.
- Inability to re-adjust or review
Most AI tools run on commands provided by human beings. The tool will not question you back or explore other aspects of your finances. It operates on as much information as you provide it. It’s not eligible to readjust your portfolio based on market fluctuations. Such circumstances can only be tackled by real financial advisors who can understand the intensity of your position and make changes accordingly.
- Limitations to knowledge
Unfortunately, given that the AI tools remain under construction, they’re not qualified to provide financial advice. No doubt, it can gather a pool of data and provide insights. However, it lacks the expertise to weigh future potential threats while deciding.
- No scope for emotional intelligence
The emotional turmoil that’s involved in financial decisions cannot be interpreted by AI tools. Despite penning down the rules or writing them off on paper, people occasionally need counseling. Financial experts provide personalized solutions based on an individual’s values, objectives, and requirements. A human advisor possesses empathy, emotional intelligence, and the ability to build rapport with the client.
What Are Your Alternatives To AI Tools?
It’s easy to give in to the temptation of having a personal financial advisor at the click of a button, which also comes free of cost. But we’ve established so far that AI tools aren’t the type of financial advisors you should rely on.
On the contrary, the following is how to become a good investor.
- Take an online course.
If you happen to be just starting with understanding finances, an online investment course is your key to wisdom. The course will enlighten you about the basics and current trends in the investment world.
- Seek advice from a financial advisor.
When you have the back of a human advisor, you can look forward to a developed portfolio and investment strategy. The financial advisor will lay out a tailored action plan specific to your goals, risk appetite, needs, and preferences. Plus, fewer emotional rash decisions will involve your hard-earned money.
- Make it a habit to read finance news and blogs.
To stay abreast of real-time financial happenings, you need to develop a habit of reading finance-related news and blogs daily.
- Look for an investment platform.
Don’t ask AI for financial advice. Rather look for a platform providing financial planning services that can assist you in money management.
Can Financial Advisors Get Replaced By AI Tools?
Most AI tools are free and widely used for virtual assistance, customer service, and other tasks. Currently, AI tools have risen to fame due to their evolution and ability to provide answers to inquiries. However, relying on AI tools for basic inquiries is fine as long as it doesn’t drive financial decisions.
Although it’s intelligent enough to source a pool of data and provide detailed explanations on financial queries, it’s not intelligent enough to become a match for a human financial consultant. So, the answer to the question is a big NO!
Hopefully, this clears the air on how reliable AI tools are as far as finance is concerned. Undoubtedly, AI tools are the epitome of modern-day technological advancements. However, it comes with its own set of limitations.