How, and how not, to use AI for money management, financial advice and investment guidance

Would you swap your investment adviser for ChatGPT? Your mortgage adviser for Claude?

A growing number of people around the world are turning to AI to help them with questions relating to anything from basic money management issues to financial advice and investment guidance.

But experts say there are a few things to watch out for if you're thinking about giving it a go.

Is it accurate?

Alexandra Andhov, chair in law and technology in the University of Auckland's Faculty of Law, said people who were asking AI for advice would need to be aware that its answers might not be objective, or even always accurate.

"If you do a bit of a test run it will probably tell you that you should invest in the big tech companies and the biggest performers on the market," she said.

"The advice is not personalised advice, it's not really fine tuned to you as an investor in New Zealand and what are your capabilities and options. It will give fairly generic kind of recommendations."

A test run for the No Stupid Questions podcast (https://www.rnz.co.nz/podcast/no-stupid-questions) revealed that ChatGPT would advise someone in New Zealand to invest in Rakon, a company that was about to delist - a pick that Kernel founder Rupert Carlyon said was about the worst option to invest in on the NZX.

Is it biased?

Andhov said there would "100 percent" be biases in AI.

She pointed to advertisements showing up in the free version of ChatGPT.

"The moment you start asking these kinds of questions, my feeling - again this is a feeling, just an observation - is that you will get some specific ads similar to what you'd get on Google. The concern is whether if you ask very specific questions whether it will turn you towards those specific products.

"There are people that are using AI for their financial decision making, and I think it could be an interesting tool … But I do think that you need to have a certain level of proficiency, you need to spend a substantial amount of time, you need to engage with several of these tools at the same time, and verify… the same way potentially that if you didn't have AI, and still you wanted to do good due diligence understanding what you want to buy.

"This might shortcut it to some extent. So you spend less time, but you still need to verify you still need to check and so on."

Is your data safe?

Andhov said another concern was what happened to someone's data when they gave it to AI.

"If you're using models that take your data to the US and you give it sensitive information… name, how much you make, how much you invest, can this be any way misused? Potentially, right? If you don't know where the data is heading afterwards, I think this might be a bit of a concern. And we see that people are being targeted. Some of this information can leak."

What recourse do you have if things go wrong?

Andhov said people should also consider what kind of recourse they had if things did not go to plan.,

"That it's the biggest concern for me as a legal scholar. One of the things is that here in New Zealand … if you read carefully any terms and conditions of ChatGPT or Claude or whatever other AI tool you're using it says 'this is just advice, you need to double check' and 'this is general and we might give you a wrong output, therefore you should not rely on this information'.

"I think we will see different kinds of new AI products that people can subscribe to. But I really would love to see ... whether they try to contract out in any shape or form their liability in case the AI gives wrong advice."

How useful is it?

FMA spokesperson Romil Ghelani said there were opportunities and risks.

"Digitisation and AI have made financial information more accessible and have the potential to materially improve access to financial information and advice. New Zealand's regulatory framework is technology-neutral, meaning the same legal obligations apply regardless of whether advice is delivered digitally or in person," Ghelani said.

"The guidance we have for consumers is that it is important to understand the distinction between financial advice and financial information. AI tools and global platforms generally provide financial information rather than being in the business of giving financial advice or managing money. Financial information includes general data, statistics, or insights and does not involve making recommendations or opinions on financial advice products. This means the protections that apply to regulated financial advice, such as suitability requirements, prioritising the client's interests, and ensuring clients understand the advice given, do not apply in the same way.

"Regulated financial advice involves providing a recommendation or opinion about a financial advice product and must be provided by, or through, a licensed Financial Advice Provider. For regulated providers, as AI adoption becomes more pervasive, it may increase existing risks or introduce new risks that are less well understood and harder to mitigate. Responsibility for ensuring advice is appropriate and fit for purpose sits with the provider of the advice, including where technology is used."

And when you complain?

Banking Ombudsman Nicola Sladden said she was already seeing more people using AI tools to help them understand their rights and prepare complaints and that was expected to continue.

"These tools can help people organise information, understand complex issues, and feel more confident raising concerns. However, they can also cause problems if they produce inaccurate or misleading content.

"We recognise customers will use AI, and our focus is on supporting them to use it well so they can get to the heart of their issue and resolve it more quickly."

She said the guidance her office gave was that people should be careful about entering personal information into AI tools.

"We're also working to ensure accurate and reliable information about banking is available from trusted sources and can be used by these tools - so they are helping people, not misleading them."

Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money.