Can AI replace real Financial Advisers?

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We are living in a time where you can converse with technology and ask it to tell you a joke, what the weather will be, or give you some ideas for a date night.

AI is everywhere in this day and age and we are constantly on the brink of even more technological advances. ChatGPT was a recent creation which everyone would have tested out by now – you can ask it anything & it will answer all your queries, to the best of its ability.

As every industry grows with each new technology, what does this mean specifically for financial planning – do advisers need to be worried about ChatGPT or is AI unable to match great financial advice in a human interaction?

How does ChatGPT work? ChatGPT is one aspect of AI – it is a language model which predicts next best word when prompted by the user. It uses language processing to create dialogue in a conversational way and can respond to questions and compose written content. However, all the knowledge that it contains has been fed in through a source which is up to a certain date (currently Sept 2021) – and it should not necessarily be used as a source of truth.

Financial Advice is more than numbers. ChatGPT is very early in it’s creation and it must be remembered that this is a language model based technology, which can give objective responses based on the knowledge it has been given. With a real financial adviser, they would be “thinking about your situation, drawing on all of their experience and seeking out the most appropriate solution, whereas ChatGPT cant do this.”* – Morningstar’s Chief Investment and Research Officer, Dan Kemp.

How is ChatGPT different from a Financial Adviser? Financial advisers look at the full picture – what your goals are, what your circumstances are, and who you are, to work on a plan to help you get to where you want to be, financially. They use judgement backed by research and a knowledge of the industry and its nuances, to create the right plan to suit each client. AI on the other hand, would be providing unregulated general information. It cannot initiate second-level thinking (knowlegde of the topic, understanding what other people know of the topic & how they view it), so it wouldn’t be able to relate on the same level as a real adviser.

AI is the future, but its not a sufficient replacement for real financial advice. ChatGPT and other upcoming technology can certainly be used to get a better understanding of complex financial topics or provide general info on a range of topics eg, the importance of savings, but it cannot make a plan suited to you in the way that an adviser can.

Remember, financial advisers are experts in their field – they know what the best options would be for you, understand your personal situation, are well versed in the industry info and are highly regulated. They will always give you that tailored advice to help you reach your goals.

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