Would you trust artificial intelligence to manage your investment portfolio? 1 in 3 investors say they’d have no problem acting upon advice given by an AI Investment Management app, which is concerning to financial experts like Kevin Keller, CEO of the CFP (Certified Financial Planner Board of Standards) who says, “Those who leverage AI for financial advice should “trust but verify” and added, “It’s the Wild West Out There”.
AI is considered the Wild West because it can be misused to spread misinformation and launch cyber attacks. AI software can be biased because human beings select the data the algorithms use and often allow personal beliefs and thought processes to come into play when programming. Anyone who has ever interacted with an AI Chatbot knows the outputs aren’t always reliable because accuracy is based on the information the Chatbot is trained on.
AI investment management apps aren’t new but are growing in popularity. Betterment launched the first “Robo-Advisor” software in 2010 to be used as an interface by financial managers then evolved to offer investment advice to individuals. Empower began offering AI investment management services in 2014, and the list goes on. Beyond the potential for inaccurate programming, the outputs from AI Chatbots can only benefit an investor when they ask the right questions, and not many investors know what questions to ask.
Many wealth management firms utilize AI to personalize advice and enhance the client experience. Because most people are visual learners, when a fiduciary financial advisor or investment manager presents a simulation to a client that was based on their unique profile and individual goals and risk tolerance, it becomes an effective educational tool that aids in the decision making process. If you have financial questions, contact Alloy Wealth Management at 800-689-3935.