Nearly 3 in 10 Americans Will Use AI for Financial Investment Advice

Artificial Intelligence (AI) is a rapidly growing technology that is revolutionizing various aspects of our lives, especially, in the world of finance and investing. This powerful tool can generate data and advice at breakneck speeds and has untapped potential to streamline the work that financial advisors have traditionally performed. 

To put the excitement around this technology into perspective, according to Statista, ChatGPT, a popular AI tool, had 1 million users within the first five days of its release. 

However, opinions on AI vary widely. Many people believe it cannot replace human expertise and advice. Others believe it could result in adverse outcomes for society, especially if individuals utilize it to commit fraud and other criminal activities. 

The middle ground seems to hold the view that while human judgment and expertise remain crucial, the integration of AI can improve the quality of information available and enhance decision-making.

To better understand how Americans feel about AI, particularly regarding finance and investing, we surveyed 1,042 adults on the subject. Read our study to explore Americans’ attitudes around using AI for financial advice. 

How Is AI Being Used In Finance?

For years, companies in the financial services industry have been utilizing AI to streamline their operations, reduce costs and augment customer experiences. Below are some examples of how the industry is using AI.

• Customer service: AI chatbots are commonly used to enhance  customer satisfaction and improve operating efficiency for the delivering organizations. These programs can provide clients with instant answers to questions, offer educational content and showcase relevant products and services.
• Risk management: BlackRock’s Aladdin platform uses AI to spot risks and opportunities for its clients and give real-time investment insights through machine learning algorithms. AI programs can analyze large volumes of transactions, spot abnormalities that indicate fraudulent activity and alert banks to this activity.
• Investment management: The most well-known instances of AI in the investment industry are robo-advisors. These client-facing programs provide personalized financial advice, investment recommendations and ongoing investment management. An AI robot known as Wealthfront uses algorithms to help manage client investment portfolios and customize them based on certain financial positions and goals. Erica, Bank of America’s chatbot, provides personalized investment advice based on their financial positions.

Currently, it seems that AI can directly benefit advisors more than clients. Documents such as tax returns and estate records can be thoroughly analyzed by AI more quickly than by humans. Complex investment portfolios can also be optimized more efficiently. Clients indirectly reap the benefits from this through their advisors. But much of financial planning involves emotion; after a divorce, should you keep a house or sell it? It might make financial sense to sell the house, but you may feel that moving and being divorced is too much change at once. We’re quite a ways from AI being able to provide the empathy needed for such a scenario.

Toby Walters, CFA®Senior Financial Analyst

Toby Walters, CFA®, is a senior financial analyst with over 25 years of experience in financial research. His knowledge spans researching and analyzing financial data to developing a one-of-a-kind viewpoint on money-related topics.

Do Americans Trust AI for Investment Advice?

When Annuity.org asked American respondents if they would trust investment advice from AI, 29% of respondents reported that they would. 38% of respondents reported that they would not. 1 in 3 people don’t know if they would. 

21% of Americans Value AI’s Quick Information

Annuity.org also asked Americans why they would trust investment advice from AI. Nearly 1 in 10 people feel that AI is more trustworthy than humans. 16% stated that they believe that AI is more accurate than humans.

Additionally, Americans said they would trust AI because of the speed that it gives information — in fact, 21% of respondents stated they value that AI provides fast data. 

The other reasons weren’t as popular, and 42% stated that they wouldn’t trust AI for any of the reasons mentioned. This highlights the respondents’ concerns about AI’s trustworthiness and accuracy.

Most Americans Wouldn’t Trust AI Over Humans for Financial Advice

In conducting this survey, a keen area of interest for Annuity.org was whether people would prefer AI over humans for various financial and investment advice categories.  

40% of respondents indicated that they would not prefer AI over humans to handle anything related to their personal finances. However, a surprising number of people would prefer AI to:

• Balance their household budget (14%) 
• Provide tax advice (13%) 
• Offer stock tips (12%) 
• Manage portfolio risk (9%)

This suggests that Americans are more comfortable with AI providing tips for less complicated and casual matters versus high-exposure issues, such as navigating through the tax landscape and devising strategies to increase wealth.   

Most Americans Stick to Financial Advisors for Investment Advice

We also asked American respondents where they prefer to receive investment advice. 

Despite the emergence of AI tools, respondents stated that they primarily receive investment advice from financial advisors (38%), family and friends (30%) and the internet (23%). 

Currently, only 1.2% of respondents receive investment advice from AI — after social media (5%) and TV (3%). 

Benefits of AI in Finance

Although many Americans don’t trust AI, the AI market is projected to reach $1.4 billion by 2031. That said, some benefits can be useful to those looking for additional and supplementary information about investing and finances: 

• Automation: AI programs can provide automated services that make getting advice and tips about finance and investing quicker and more accessible. 
• Streamlined tasks: Since AI is a robot, it can perform many tasks at once that humans may not do as quickly or efficiently. 
• Enhanced data analysis: AI algorithms can extract insights from vast amounts of financial data, helping financial institutions identify trends, patterns and correlations. These insights enable better forecasting, risk management and strategic decision-making. 
• Fraud security and detection: AI algorithms can analyze large volumes of data and identify patterns or anomalies that may indicate fraudulent activities. This mitigates loss exposure and improves risk-adjusted financial performance.

Challenges of AI in Finance

Despite the immense efficiency and decision-making improvements that AI seems to have for finance, there are notable challenges that AI in finance faces, such as: 

• Data quality and availability: AI algorithms require high-quality data to operate at maximum potential. Ensuring data accuracy, completeness and consistency could be challenging, especially when dealing with diverse and complex financial data sets. 
• Skills and talent gap: Implementing and managing AI systems requires specialized skills and expertise. Since it’s a newer technology, there’s a shortage of professionals with a deep understanding of AI technologies and their application in finance. This could also affect data quality. 
• Ethical considerations: The use of AI raises ethical concerns, particularly in finance. Bias in AI algorithms can lead to unfair practices in areas such as credit scoring and loan approvals. 
• Ability to adapt: AI models work off historical data, so in an industry such as finance, where conditions are continuously changing, AI may not be able to incorporate new developments quickly enough to produce sensible guidance. 

Is AI the Future of Finance?

Many Americans are wary of receiving financial advice from AI, but the technology is firmly entrenched in our economy and is gaining supporters. Today, there is no debate about whether these tools can efficiently handle routine matters, such as customer service and index-based investment. However, there is an ongoing argument focused on whether these tools can successfully advise on highly complex matters, such as tax-minimization and investment strategies.

While AI holds significant promise for the future of finance, it’s important to note that human expertise and oversight are vital counterbalancing factors to this technology. If you’re looking for simple advice about financial and investment opportunities, then AI could be a helpful tool you can use alongside advice from a financial advisor. 

Get a Trusted Financial Advice Today

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Methodology

The survey of 1,042 adults aged 18+ was conducted via SurveyMonkey Audience for Annuity.org on June 29, 2023. Data is unweighted and the margin of error is approximately +/-3% for the overall sample with a 95% confidence level.