If you ask an AI chatbot for advice on how to revive a wilted tomato plant or for a movie recommendation, even a bad answer has pretty low stakes. Not true when your money is on the line.
Still, some Americans are giving it a try. The data analytics company JD Power asked 4,000 people about their financial health and found that 40% of them had turned to AI in the prior three months to help manage their finances. More than a third of those using AI said they found the advice helpful in making smarter financial decisions, comparable to the share of those who found their bank's advice helpful.
What people ask AI about money
David Kendrick, a 53-year-old IT manager in Dayton, Ohio, uses ChatGPT so often for advice that he has started referring to it as "Chatty." He has asked it about everything from what to do with his home equity line of credit to how to handle his recent salary bump. When he wondered whether to put more income toward debt or his Roth IRA, Chatty suggested the Roth. Kendrick listened.
He does see a human adviser once a year, but having access to advice anytime, as well as being reassured that his financial plans look OK, calms his financial anxiety. "I've always kind of had that, because my parents struggled," Kendrick said. "And this very much helped."
Overall, Kendrick's finances are solid. That's not necessarily true for the biggest group using AI for financial advice, according to the JD Power survey. The firm labeled those people as "overextended," meaning they may be slightly over their budgets and carry some debt. Those users reported asking chatbots questions about stretching their dollars, and got back advice along the lines of skipping the name-brand cereal for the store version.
Where AI gets the basics right
Tough Choukhmane, an associate professor at the MIT Sloan School of Management, co-authored a paper - not yet published - finding that AI does well at giving fairly broad economic advice. "It tends to push people toward saving more, participating more in the stock market, de-risking as they get older," Choukhmane said. The study had 1,000 adults write prompts asking an AI model for advice, then simulated the lifetime effects if people had followed it. The finding: following the advice would have ended in more savings.
That doesn't mean AI nails every scenario. It struggled with more complicated requests, like how to handle a job loss. The AI suggested spending cuts researchers considered too harsh, and didn't advise the user to dip into savings meant for tough financial moments. The researchers also felt it gave poor advice on rebalancing a portfolio, and it suggested riskier moves for men than women.
Why detailed prompts matter
Finance experts think AI advice works best for questions where the information is either very basic or very detailed. The trouble is many questions fall in between, and in those cases AI can make mistakes.
Danielle Harrison, founder of Harrison Financial Planning in Columbia, Missouri, tested this. She told an AI model about her husband joining her firm and asked how they should structure their business. The AI told her she needed to form an S corporation. When she kept feeding it more information, it completely changed course and told her she needed an LLC. "If I had not had that background knowledge, it would have given me the wrong information," she said.
AI models can also make up sources - a phenomenon called "hallucination" - or make incorrect assumptions about someone's situation. Sharon Bloodworth, CEO of White Oaks Wealth Advisors, which has offices in Minneapolis and Sarasota, Florida, said learning from her real-world experience that AI is more right than it is wrong. She also sees it as an opportunity to offer financial planning advice to people without access to human advisors. "Ignoring it would be almost like saying, 'Don't pick calculators' or 'Don't get into a car, and just still ride a horse,'" she said.
For all his enthusiasm, Kendrick is still careful with Chatty. He doesn't give it direct access to his financial accounts, just facts, and he knows not to take everything at truth, since AI models can be sycophantic. Whenever the AI starts calling all his ideas great, he shuts it down. "I'm like, 'Hey, quit that. You got to be real with me,'" Kendrick said.
Why this matters for finance professionals
AI is already entering the everyday financial workflow - whether as a client's casual advisor or a tool your own team uses. The findings suggest the AI can handle straightforward questions, like saving more or how to invest, but can struggle when the situation gets complicated. That's exactly where you add value if you can spot the gaps. Treat AI as a useful starting point, but don't assume it's told the full story. As Kendrick's experience shows, the user usually decides - not the tool - and that remains the case for finance professionals too.
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