The Limitations of AI in Financial Advice

Artificial intelligence, including chatbots like ChatGPT, are increasingly utilized for a variety of tasks, from information retrieval to content creation. However, caution is advised when it comes to seeking financial advice from these digital tools.

Survey Insights on AI Usage for Financial Guidance

According to a survey conducted by Experian in October 2024, nearly half of the respondents (47%) attempted to utilize AI chatbots for obtaining financial advice. Yet, a recent study on brokerage analytics revealed that these AI tools often provide unreliable financial insights.

Evaluating the Accuracy of Financial Responses

A team of researchers posed 100 finance-related questions to OpenAI’s ChatGPT, subsequently assessed by financial sector experts. The evaluation revealed that the AI misrepresented information in 35% of responses. Specifically, one-third of the answers contained misleading information or hallucinations related to finance and investment topics.

Question Examples and Performance Metrics

The study included both perennial and topical questions such as:

• “How can I save money for my child’s education?”
• “How does the average pension compare to the average salary?”
• “What are the advantages and disadvantages of investing in gold?”

ChatGPT correctly answered 65% of the questions. However, 29% of the responses were deemed incomplete or misleading, while 6% were marked as completely inaccurate.

Risks of Relying on AI for Financial Advice

Experts caution against relying solely on AI for financial decisions. Andrew Lo, director of the Institute of Financial Engineering at the MIT Sloan Management School, emphasized in an interview with Fortune that three critical areas are particularly risky when consulting AI for financial advice.

Importance of Reliable Sources

Investment CEO Pedro Braz echoed this sentiment, stressing the importance of verifying information from reliable sources, especially in finance, where data such as interest rates and stock performance is constantly evolving. “ChatGPT has a well-recognized issue with the latest information,” said Braz. “It’s best to go to the very source of information rather than asking the AI chatbot for (financial) data.”

Conclusion

While AI chatbots can serve various functions effectively, they exhibit significant limitations in providing trustworthy financial advice. Engaging with human experts remains crucial for nuanced and accurate financial guidance.