Nearly half of Americans have turned to AI chatbots for financial advice in the past three months, according to a JD Power survey of 4,000 people about their financial health. More than a third of those users said the advice helped them make smarter financial decisions - roughly the same share who said the same about their bank's advice.
That's a striking vote of confidence for a tool that can confidently tell you to form an S corporation one minute and an LLC the next, depending on how you phrase the question.
Who's asking the chatbots
David Kendrick, a 53-year-old IT manager in Dayton, Ohio, uses ChatGPT so often for financial advice that he calls it "Chatty." He has asked it about everything from what to do with his home equity line of credit to whether to put a recent salary bump toward debt or into his Roth IRA. Chatty suggested the Roth. Kendrick listened.
He still sees a human adviser once a year, but having advice available anytime - plus reassurance that his 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."
The biggest group using AI for financial advice, per the JD Power survey, is what the firm labels "overextended" - people who may be over their budgets and carrying some debt. They're asking chatbots how to stretch dollars and getting answers like swapping name-brand cereal for the store version.
What the research shows
Taha Choukhmane, an associate professor at the MIT Sloan School of Management, co-authored a not-yet-published paper finding that AI does well at broad economic advice. "It tends to push people toward saving more, participating more in the stock market, de-risking as they get older," he said. "It gets a lot of things right."
In that study, 1,000 adults wrote prompts asking an AI model for advice. The researchers simulated the lifetime effects of following that advice versus not following it. Overall, following the advice would have led to more savings.
But the AI stumbled on complicated requests. When asked how to handle a job loss, it suggested spending cuts the researchers considered too harsh and didn't advise dipping into savings meant for tough times. It also gave poor advice on rebalancing a portfolio, and it suggested riskier financial moves for men than for women.
When AI gets it wrong
Finance experts say AI advice works best at the two ends of the sophistication spectrum: very basic Finance 101 questions, and power users who provide detailed prompts and lots of data about their situation. In between, mistakes happen.
Danielle Harrison, founder of Harrison Financial Planning in Columbia, Mo., tested an AI model by asking how she and her husband should structure their business after he joined her firm. "It gave an answer that it was sure about. It was like, 'You need to be an S corporation,'" she recalled. When she kept prodding with more information, the model "completely changed tunes by the end of it" and told her to form an LLC instead. "If I had not had that background knowledge, it would have given me the wrong information," Harrison said.
AI models can also fabricate sources - a phenomenon called hallucination - or make incorrect assumptions about someone's situation. Sharon Bloodworth, CEO of White Oaks Wealth Advisors, said that in her experience, AI is wrong more than it's right. But she expects it to improve and sees it as a way to offer financial planning to people without access to human advisers. "Ignoring it would be almost like saying, 'Don't pick up a calculator' or 'Don't get into a car, and just still ride a horse,'" she said.
Kendrick, for all his enthusiasm, remains careful. He doesn't give the AI direct access to his financial accounts, only copies. And he knows not to take its advice as gospel, because AI models can be sycophantic - telling users what they want to hear. When Chatty starts calling all his ideas great, he corrects it. "I'm like, 'Hey, quit that. You got to be real with me.'"
Why this matters for finance professionals
Clients are already using AI for financial decisions, whether advisers know it or not. The JD Power numbers suggest a large share of consumers treat chatbot output as roughly as credible as advice from their own bank. That creates a real risk: clients may act on confident but wrong answers, especially on complex questions like business structuring or job-loss planning.
Finance professionals should ask clients directly whether they've consulted AI tools, then review those suggestions for errors. The same technology can also be part of the solution - AI learning paths for finance managers now cover how to use these tools for planning and forecasting while spotting their limits. And for clients who can't afford traditional advice, AI for finance resources can help professionals deliver guidance more efficiently - though the human review step remains essential.
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