Americans are using artificially intelligent chatbots like ChatGPT to boost their resumes and accelerate their side hustles, but it doesn’t look like they’re turning to the tool for financial advice.
Nearly 60% of Americans say they’re not interested at all in using AI tools to help them manage their money, according to a new CNBC Your Money survey conducted by Survey Monkey. In fact, only about 4% say they’ve already used AI to help them with their finances.
How ChatGPT can and can’t help you invest
While AI chatbots can be useful for gaining a broad understanding of financial concepts and terms, the tool has its limits — especially when it comes to personalized financial advice, says Douglas Boneparth, a certified financial planner and the president and founder of Bone Fide Wealth. Boneparth is also a member of CNBC’s Advisor Council.
“Someone could ask it what a stock is, and it will literally tell you what a stock is,” Boneparth tells CNBC Make It. “But by no means is it at a point or should be used to help you make specific investment decisions, and it’s not going to provide you with specific investment recommendations.”
If you choose to invest in individual stocks, you’ll typically want to base your decisions on real time data, says Boneparth. Publicly traded companies publish quarterly earning reports, which can be a good source of information about the financial health of a company. The statements contain the latest information on important factors such as the company’s revenue and sales volume.
To that point, it’s important to note that ChatGPT’s responses are based on 2021 data, so it currently doesn’t have knowledge of events that occurred after that. Also, OpenAI warns users that ChatGPT may write “plausible-sounding but incorrect or nonsensical answers” and the tool isn’t intended to give advice.
But rather than hand-picking individual stocks, one of the simplest ways to start investing is by buying index mutual funds or exchange traded funds — an investment strategy Warren Buffett swears by. Unlike actively managed funds, these types of passive funds aim to mirror the performance of a market index, such as the S&P 500 which tracks how well about 500 large, publicly U.S. listed companies are doing.
Since your investment would be spread across a wide array of companies, this method can be a great way to introduce diversity to your portfolio.
Need investing help? Try a robo-advisor or a traditional financial advisor
Rather than turning to AI chatbots, there are other more tried and true options available to you if you’d like financial help.
One option is a robo-advisor. Robo-advisors like Betterment or Wealthfront make automated investments in the stock market on your behalf, says Boneparth. Typically, you fill out an online questionnaire about yourself and your financial goals which the robo-advisor uses to create a personalized investment portfolio.
But unlike ChatGPT or other AI chatbots, robo-advisors are required to comply with the Securities and Exchange Commission’s securities laws and standards.
A robo-advisor can be a convenient way to invest and can cost less than a traditional human financial advisor since there isn’t a person actively managing your portfolio. However, it most likely won’t be able to offer you personalized advice on how other aspects of your finances, such as your debts or other investments, may impact your ability to reach your investment goals.
On the other hand, a traditional financial advisor, such as a certified financial planner, can offer tailored or custom-built investment portfolios and help you understand how your investments fit into your overall financial goals, says Boneparth.
Also, a real person would be able to help you understand how life events or market volatility may impact your investments, he says.
Whether you choose to use a robo-advisor, a human advisor or manage your portfolio yourself, it’s important to pick a strategy you can stick with for the long run, Boneparth says.
“Whatever approach is going to allow an investor to stay disciplined and consistent with an investment strategy is going to be the right one for them,” he says.
