As artificial intelligence (AI) increasingly influences both our personal and professional lives, skepticism remains regarding its effectiveness in providing reliable financial advice. While tools such as ChatGPT and Google Gemini have gained traction for tasks ranging from composing wedding speeches to drafting legal documents, their capabilities in finance are still under scrutiny.
AI’s expansion into finance seems like a natural progression, as it can potentially democratize access to important information such as investment strategies and tax guidelines for those who might feel overwhelmed by traditional financial services. However, a recent investigation by consumer watchdog Which? has revealed significant limitations in the financial advice these AI tools can offer.
AI Tools Tested for Financial Advice
Which? evaluated six AI tools, including ChatGPT, Google Gemini, Gemini AI Overview (AIO), Microsoft’s Copilot, Meta AI, and Perplexity, by posing 40 common personal finance questions. The results were alarming: many responses were found to be “inaccurate, unclear, and risky,” potentially leading users to costly financial mistakes.
According to Andrew Laughlin, a technology expert at Which?, this investigation highlighted that “everyday use of AI is soaring, but when it comes to getting the answers you need, the devil is in the details.” Particularly troubling was the discovery that both ChatGPT and Copilot failed to spot a deliberate error regarding the individual savings account (ISA) allowance, mistakenly advising users based on an incorrect £25,000 limit rather than the accurate £20,000, risking noncompliance with HMRC regulations.
Another test involved asking these AI tools about tax codes and claiming tax refunds. Both ChatGPT and Perplexity directed users towards paid services instead of the free options provided by the UK government.
Understanding AI’s Limitations in Finance
The organizations behind these AI tools maintain that users should verify any information provided before taking action. Laughlin emphasized the importance of phrasing questions clearly and checking the sources used for AI-generated answers. He urged consumers to seek professional advice, especially for complex issues such as legal matters and major financial decisions.
This is not the first instance of AI facing criticism over its financial advisory capabilities. A previous study conducted by financial education specialists Investing Insiders assessed AI tools’ accuracy across 100 finance-related questions. The findings showed that AI tools were correct only 56% of the time, misleading for 27%, and incorrect for 17%, indicating that nearly half of the answers provided could potentially mislead users seeking financial guidance.
Antonia Medlicott, founder and managing director at Investing Insiders, expressed concern over AI’s misleading nature, particularly as many individuals rely on it for critical decisions ranging from savings to retirement planning.
Addressing the User Experience and Education Gaps
In contrast, Mitali Deypurkaystha, an AI strategist at Impact Icon AI, attributes some inaccuracies to user error rather than AI failure. She points out that many users may not be asking the right questions or using the appropriate tools for their financial inquiries. Deypurkaystha advocates for enhanced financial literacy programs to help users navigate AI tools more effectively, arguing that the focus should be on teaching individuals how to utilize AI rather than discouraging its use altogether.
In summary, while AI tools like ChatGPT and Google Gemini hold promise in delivering quick answers for financial queries, their current reliability remains questionable. As regulations are not yet in place for AI financial advice, consumers must tread carefully. As David Horowitz, head of financial planning at Gerald Edelman, suggests, using AI for financial decisions should complement—not substitute—expert, regulated advice tailored to personal financial situations.
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