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Financial planning can feel like a daunting task to undertake for your own finances. Do you hire and pay someone, or do you leverage free or low-cost tools like artificial intelligence (AI)?
Britta Ferguson, CFP, senior vice president and financial advisor at Wealth Enhancement Group, says that while AI can certainly help with some steps in figuring out household finances, it lacks much of what a human planner can bring. It is possible that the nuances of this are missing.
Ferguson explained some of the reasons why you shouldn’t rely on AI financial planners in the long term.
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If you want a sense of humanity
While AI algorithms may be based on human input, Ferguson pointed out that what AI provides is often a generic form of information that is not tailored to the client. “Everyone’s situation is different and different when it comes to financial planning. Their concerns, goals, wants, and needs when they start the meeting often continue to evolve into something perhaps a little deeper,” she says. explained.
Money is also an emotional and psychological topic, and AI probably cannot ask deeper questions to ensure it addresses the psychology behind money, she said.
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Want a personalized financial planning experience?
Human financial planners have the ability to “pivot and adapt” to their clients’ needs, Ferguson said. AI may attempt to solve queries and questions, but only humans can bring in additional layers of emotion and customization. “I don’t believe that AI can be adapted specifically enough to be emotionally understood by humans. [outcome]” she said.
Human planners, on the other hand, don’t just enter data, they also ask questions about client satisfaction, risk tolerance, personal goals, and more. Humans can tell other humans that they really care.
“I’m sure AI can be customized in this regard, but what AI can’t provide someone with is how do I make sure my customers don’t sell out when there’s a big correction in the market? Markets? How can you help your clients sleep better at night based on the decisions they make? How can you help them retire with real confidence? Do you want it?”
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Ferguson feels that such questions may be outside the scope of AI’s capabilities.
If you want to take responsibility
Another very important role that certified financial planners of all types bring to the table is accountability to their clients. “I adhere to fiduciary standards and am legally required to put my clients’ best interests first. What kind of oversight will there be with AI? Are such legal standards applicable?” asked Mr Ferguson.
AI financial planners may be helpful for beginners who want a high-level view of their financial situation, but may be less suited for more complex problems, she said.
If you need customization
Ferguson said if you’re looking for customized planning, estate planning, retirement planning, income planning, it’s unlikely that AI will understand how all of this works together.
“I don’t think AI will ever be able to understand and see all this and that, not just your personal goals, but your personality preferences and what keeps you up at night. . [into account]But you can say: Based on all these human factors as an individual, these are the steps you take. ”
When you want a trusted experience
While human financial planners have varying degrees of experience, Ferguson pointed out that when it comes to AI, we don’t know how it’s being programmed and by whom.
Furthermore, she said: “In order to formulate advice, we have to base it on historical data. If the situation is changing, if the law is changing, if the market is changing; [are] How quickly can AI reflect real-time changes versus calling a financial planner?”
If you want to trust the advice you receive
Ferguson acknowledged that AI is likely to be here to stay and can be used for financial planning, but cautioned against trusting all the information it generates and not acting on its advice. You should get a second opinion and check the facts first. . We can’t guarantee advice if we don’t know where the algorithm is pulling its information from.
If you want to consider your specific financial situation
Most importantly, if you want someone to care not just about their finances, but also about their overall financial situation and how it affects them, using AI probably isn’t the right choice. Mr. Ferguson said.
“As a financial planner, I make sure to execute the plan and make sure we stay on track,” she said. An AI planner is unlikely to call you to check in or set up an appointment, much less proactively address things like year-end tax planning and whether your estate plan is put together. Sho.
There’s nothing wrong with trying your hand at AI to get a feel for certain financial moves and possibilities, but if you need anything like the above for your finances, a human financial planner is the best option. This will be a measure.
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This article was originally published on GOBankingRates.com: I’m a Financial Planner: 7 Reasons You Shouldn’t Use an AI Financial Planner
