From writing cover letters to drafting academic articles, generative AI programs are transforming the way business is conducted -- including in the financial planning field.
And if you鈥檙e a millennial or gen Z on a budget, AI might be your ticket to accessing some straightforward personal finance advice.
In fact, Intuit 鈥� the company behind Mint and TurboTax 鈥� recently said it was trying to make financial planning more accessible by incorporating generative AI into its software.
鈥淣ot everyone is born with the financial knowledge needed to know how to research and ask the right questions,鈥� said Nhung Ho, vice-president of AI at Intuit, whose team has spearheaded the company鈥檚 new generative AI operating system, GenOS.
鈥淲hat we鈥檙e trying to do is meet people where they are and allow them to ask questions in their own words, which the program can use to match them up with the best advice and ways forward.鈥�
Though complex generative AI systems are a novelty within the financial planning world, AI has been a significant part of personal finance services for nearly a decade, said Alberto Rossi, a professor of finance and robo-advising at Georgetown University in Washington, D.C.
He pointed to financial aggregators like Intuit鈥檚 Mint 鈥� which tracks customers鈥� bank accounts to help manage their budgets and cash flow 鈥� that emerged in the early 2010s as predecessors to today鈥檚 GenOS-esque programs.
鈥淎s technology changed, [companies] started realizing that a lot of the market was cut out of financial advice,鈥� said Rossi. 鈥淪pecifically, people who could not really afford a human financial advisor because they did not have the assets to pay them.鈥�
Software companies began to move in two directions. Developers either looked to produce fully-automated systems, or designed hybrid programs where consumers would receive initial advice through AI 鈥� and, later on, could seek out more specific help from a human advisor.
鈥淥ften, what people really need is advice to avoid making the biggest mistakes, like letting money sit in your savings account while your credit card debt gains interest,鈥� he said. 鈥淥nce you fix those, you鈥檙e basically 90 per cent of the way there.鈥�
Ho echoed Rossi鈥檚 views, emphasizing that Intuit is not looking to replace human financial advisors, but rather seeks to use them to bridge that remaining knowledge and advice gap.
鈥淚t鈥檚 not about reducing human interaction, but instead increasing the quality of those interactions,鈥� she said.
Thus, instead of paying a financial planner from the beginning, users could save money and time by using generative AI for the bulk of the necessary preliminary research and advice a financial planner would likely charge significant fees for.
鈥淎I systems are great, but they're not 100 per cent right all the time 鈥� so that's where you pair it with a person who has years of that domain expertise so you can take that next step and act on the advice it gives you,鈥� added Ho.
While the jury is out on robo-advising as a way to make financial planning more inclusive, Rossi said, he said it's important that these programs be designed in a way to ensure individuals are willing and able to divulge the necessary information to render useful advice.
In particular, 鈥渟oft financial information鈥� 鈥� like how volatile one鈥檚 employment status is, or the average life expectancy of one鈥檚 family 鈥� may be easier to obtain through one-on-one interactions with a human advisor a customer feels they can trust, as opposed to an unfamiliar AI program.
鈥淧eople can be very secretive about their financial information,鈥� said Rossi, 鈥渟o what people need is a holistic robo-advisor that takes into consideration the entire picture, and is able to get that picture based on the kinds of questions it asks and how it asks those questions.鈥�
Perhaps most important when considering what financial AI to use, added Rossi, is how the software protects and uses one鈥檚 data. He cautioned against software developers who may use personal information (like age or gender) to market specific products through the advice it generates, like promoting one bank鈥檚 line of credit over another as a paid advertisement under the guise of unbiased 鈥榓dvice.鈥�
Ho also noted the importance of doing one鈥檚 research before selecting which personal finance AI to use. She said consumers should be careful to use generative AI specifically designed for financial planning rather than any old chatbot out there.
鈥淒ata privacy is incredibly important, but so is understanding that not every generative AI system out there is created equal,鈥� she said.
鈥淲hat we don鈥檛 want to happen is folks who already don鈥檛 have great access to financial resources using systems that give them terrible advice and put their data at risk 鈥� so it鈥檚 not just about financial literacy, but data literacy, too.鈥�
This report by The Canadian Press was first published July 18, 2023.
Pascale Malenfant, The Canadian Press
