Most Retail Investors Are Using AI. Advisors Are Getting Worried

ChatGPT AI’nt got nothing on me.

Almost 80% of retail investors globally said they’ve incorporated AI into their investment research process, according to a survey from the analytics firm Bridgewise. More than half of people who use artificial intelligence said they’re very confident in its guidance. And even a portion who have never used the tech still say they would be confident in it. Advisors aren’t surprised by those figures, but they are worried by them, concerned AI has many pitfalls and hallucinations the average investor might not be able to recognize. The question isn’t whether AI should be part of financial decision-making, but what role human advisors will choose to play alongside it, said Amy Mullen, CFP and president of Money Quotient.

“Competing on information alone is a losing game,” she told Advisor Upside. “The advisors who remain indispensable will be the ones who create space for reflection, guide clients through transitions, and help them design lives that are aligned with their values, not just optimized spreadsheets.”

The Why of AI

When it comes to investing, the three main reasons people consult AI are to double-check their financial decisions, speed up their research and discover new investing opportunities. “By the time one becomes a frequent user … the true value sought and found is the ability of AI to surface global insights and hidden opportunities that remain invisible to those relying on manual processes,” Bridgewise said in the survey

• The report also found: North Americans and Europeans are the least likely to use AI for investment management, while almost a quarter of those in the Middle East said they consult AI for every investment query.
• Roughly a quarter of investors who use AI believe it gives them an edge over those who don’t.
• Men were more likely to say AI gives them a strategic advantage, while women were more skeptical and uncertain.

Are You Sure About That? While AI can be a great starting place to break down financial topics into easily understood language, cracks can start to show with queries that are even marginally more complex, said Gabbi Cerezo, a CFP with Sustain Financial. “I recently met an inexperienced tax preparer who told me he uses AI to help provide tax advice,” she said. “I double-checked everything he had advised my client on and found it to be wrong, which would have cost my client hundreds to thousands of dollars in mistakes.”