Can AI provide sound financial planning?

SALT LAKE CITY — Shane Stewart has been a certified financial planner for years and years. So, who better than to put artificial intelligence through the financial advising paces?

"(Let's) see if it puts me out of a job," Stewart remarked as we started to ask AI bots about knocking down credit card debt.

"I have five credit cards. How should I attack my debt?" we typed into both ChatGPT and Meta AI.

We wanted to see if AI would recommend the avalanche method, where you attack the debt with the highest interest rate first. Or if you should snowball it and target the smallest loan first.

"The psychology of this is if I focus on highest interest rates, I may not get a win for quite a while," Stewart explained of the avalanche method. "Whereas, if I start with the smallest balance that that win will come quicker. It motivates me to go again, and I've seen people just light up."

The answer we got from both ChatGPT and Meta AI was either.

"The question would be, 'OK, well, which one?'" Stewart commented.

He found the advice offered by the AI programs very useful: allocate extra payments, consider a consolidation loan, review your budget and stay disciplined.

"So, a lot of good tips but not a map to run on for the individual," he said. "This would require someone to then say, 'OK for you, I think this is your number one goal — number one task, number two task, number three."

We did notice that Meta's AI was more sympathetic to our plight.

"Giving us some emotion at the top," I pointed out.

"Yeah, take a deep breath and assess," Stewart read from Meta's advice. "I love it. I would actually say the same thing."

We upped the ante on our next query with a tough scenario.

"Should I use a charitable remainder trust? Well, that's so out there, nebulous that who knows. In fact, let's use that one," Stewart said, as he typed in the inquiry. In seconds, both ChatGPT and Meta AI took us through the pros.

"Allows you to support your favorite charity. You may receive income tax deductions and avoid capital gains," we read from the results. Chief among the cons was the complexity — so complex, even both AI bots not only told us to talk to an advisor – they considered talking to an advisor a must.

"Before deciding on a charitable remainder trust that's crucial to consult with a financial advisor or estate planning professional who can assess your specific financial situation," Stewart read from the Meta AI program.

"Before, it was like you might want to talk to. Now, it is essential that you talk to a financial advisor, it says," I pointed out to Stewart.

"Yes. The preliminary information is excellent — meaning the definition of it, but I don't see any advice in there yet," he responded. "If it were me and you were asking me, should I have one (charitable remainder trust) and we sat down and I asked you some preliminary questions and realized, 'Yeah that might work for you,' we would bring on a couple of other advisors. We would probably bring on a CPA and a trust attorney to make sure it's right for you and to make sure it's set up correctly."

This next scenario, however, is one Stewart said he gets all the time from clients – should I take 401K money out for a vacation. And after thinking on it for a few seconds ChatGPT began spitting out all sorts of reasons why that's a very bad idea; withdrawal penalties, tax implications, taking a hit on your retirement. But it also threw out alternatives like setting up a dedicated savings account or budgeting within your income.

"Something, frankly, I would lean towards saying," Stewart said of the information.

Meta AI's results were very similar to ChatGPT's, though Stewart bristled at its suggestion of using credit cards to avoid tapping into the ol' 401K.

"What if I don't know that you're deeply in debt, and you read this and go, 'Oh, Meta AI says I can go on vacation on my credit card.'"

For Stewart, that's the biggest rub about going to AI for financial advice. We didn't see any follow-up questions or even preliminary ones that an advisor would ask to understand the complexities of an individual's situation.

"Either ChatGPT or myself could come up with a solution but in isolation, it might be the wrong thing to do if I didn't know about those things like (being) terminally ill or children in need of money – that kind of thing," he said.

Stewart believes AI can be a useful tool in financial advising: automating tasks, analyzing data, identifying trends and so on. But he says his job is safe, because AI doesn't know the right questions to ask and it doesn't know the art of responding to nuanced needs.

"The art to that, however, is the interpretation of it (advice) and the application to the individual," Stewart said. "I would want to know more about your situation. You may say, 'well I'm past 59 and a half. I am in a good tax situation. I don't need money to grow anymore. I'm at a phase where I need it,' and then I would say, 'OK, so you might be a good candidate. How much is the vacation? Is it a large amount out of your 401K?' And not to be condescending to anyone at all, I would crank up the vocabulary to your level or bring it down to your level."

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