Would you trust ChatGPT to plan your retirement?

AI seems to be everywhere, and in many cases, it can be incredibly useful. However, using AI as a replacement for a financial planner can sometimes backfire, as it doesn’t always give accurate information.

As AI tools are becoming more sophisticated, it can be hard to remember that you’re talking to a bot. This can lull you into a false sense of reassurance that you’re getting professional advice, when in fact it could prove damaging to your long-term wealth.

AI bots can seem like friends

AI bots like ChatGPT have become so popular that they can feel like a source of gospel truth. Looking for a restaurant nearby, want to draft an email, or need to explain something complicated to your children? ChatGPT is always on hand, never closed, and always ready with the answers.

So, it’s no surprise really that this reliance has started to extend into financial advice. According to Pensions Age [1], pension savers are increasingly turning to AI for retirement planning advice, rather than specific financial guidance and advice websites.

When it’s good, it’s good

AI has some amazing applications, and ChatGPT can actually be very useful in certain circumstances.

For example, you may choose to use ChatGPT for research or planning before seeing a financial adviser to lay the groundwork for your conversation.

It can also be useful to explain financial concepts which you may not understand in detail.

Plus, it’s adept at mimicking empathy, so rather than the cold list of websites a Google search will generate, ChatGPT will dress its answers up a little more respectfully. This can be helpful if you’re talking about financial loss or hardship, for example.

However, it’s not a reliable replacement for a real-life financial planner.

4 reasons AI isn’t the retirement planner you need

1. It’s not always accurate

One big concern is that AI simply isn’t equipped at the moment to give accurate financial advice. In fact, according to DIY Investor [2], research found that ChatGPT gave the wrong answers to financial queries in 35% of cases.

That’s rather a lot of doubt if you were planning to entrust it with your wealth.

2. Lack of regulation

Financial advisers and intermediaries in Ireland are regulated by the Central Bank of Ireland, ensuring they protect their customers’ best interests.

And the Financial Services and Pensions Ombudsman (FSPO) can help to resolve complaints against regulated financial service and pension providers. However, ChatGPT is not subject to these regulations, and if you act on its bad advice, there’s no compensation scheme and no accountability.

3. It’s not personalised

When you take financial advice, you and your planner will look at a whole range of factors, including your income, savings and investments, retirement plans, and hopes and aspirations. The answers we come up with will be highly individualised, based on your own unique set of circumstances.

Ask a bot, however, and while it might sound chatty and friendly, it will simply be churning out the same information to everyone who asks the same question.

4. Your data may not be safe

Unfortunately, it’s all too easy to give away personal or private data to an AI bot. But AI technology is vulnerable to exploitation from hackers and fraudsters, which means your data could fall into the wrong hands.

A genuine financial planner will abide by General Data Protection Regulations (GDPR), which are strict rules governing the use and storage of your personal information. Financial details are sensitive and need to be dealt with accordingly, which an AI bot simply isn’t programmed to do.

A real-life financial planner can give you more answers than questions

Working with a human offers you a whole different approach to your retirement planning.

You know they’ll be working in your best interests and will take the time needed to understand your personal circumstances and how these translate best into your retirement planning. You may wish to take early, late, or phased retirement, for example, or you may want to have plenty of funds available at the start of your retirement to travel.

Not only this, but you’ll also have the reassurance that you’ll be protected by regulations and data protection, so the conversations and details you share will remain confidential.

Ultimately, a bot can only give you so many answers. A good financial planner can give you infinitely more.

If you’d like to speak to a real financial planner, I’m always here to help.

Email rory@brazilfinancial.ie or call +353 86 824 7542.

Please note

This article is for information only. It is not investment advice. It describes financial planning services that Brazil Financial Planning can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.

Brazil Financial Planning Ltd T/A Brazil Financial is regulated by the Central Bank of Ireland. Registered No. 477512.

Sources

[1] Pensions Age, Pension savers increasingly turning to AI when starting retirement planning

[2] DIY Investor, ChatGPT ‘Should not be trusted with financial advice’