When it comes to personal finance, automation can be a powerful tool – just ask the millions of folks who’ve been able to build a nest egg thanks to automatic retirement plan contributions, or those who’ve been able to eliminate late fees by automating bill payments.
But is automation and AI in financial planning a good thing? Keep reading and decide for yourself.
Financial Firms and Fintechs Are Leaning More Heavily on Automation
In recent years, financial firms and fintechs have been leaning more heavily on automation to deliver services at scale, from automated portfolio rebalancing to automatic tax-loss harvesting through robo advisors.
Such services rely on rules-based instructions for repetitive tasks, but now more firms are looking into introducing intelligent automation – or even artificial intelligence – through which computers can use data to learn and make more complex decisions.
JPMorgan Chase, for example, has said that it expects AI to deliver $1 billion in business value by the end of 2023, leaning on the technology (and its 900 in-house data scientists and 600 machine-learning engineers) to deliver more personalized products and experiences to its customers.
And Intuit – owner of TurboTax, Credit Karma and Mint – has introduced AI-powered Intuit Assist across its products to “deliver personalized financial insights to our 100 million small business and consumer customers.”
Good News for Consumers: Potentially Lower Prices
Continued innovation in the space could ultimately be good news for consumers, says Stephanie Genkin, a certified financial planner and founder of My Financial Planner LLC in Brooklyn, New York.
“There is going to be more price competition, because you can’t do business the old way and just charge for a percentage of assets under management,” Genkin says.
“As younger generations are coming into finance and they are comfortable with AI, they’re going to be asking questions of their human advisors and they’re going to want to know the difference between what they’re getting there and what they might get from other services, including through AI,” she adds.
The introduction of ChatGPT has boosted consumer awareness of the potential of AI – and many are open to using such tools in their own financial lives.
But while the means of delivering advice may change due to AI, the underlying foundations of personal finance remain the same, says Jeremy Finger, a certified financial planner and founder of Riverbend Wealth Management in Myrtle Beach, South Carolina.
There Will Always Be a Place for Humans
While consumer-facing AI services in personal finance are relatively new, financial services firms for years have relied on the technology for everything from fraud detection and investment selection to credit scoring. As the technology evolves, the use cases appear nearly infinite, but many financial planners believe there will always be roles for people within the field.
“We have personal relationships and a background and understanding of our clients,” says Catherine Valega, a wealth consultant with Green Bee Advisory in Winchester, Massachusetts. “And it’s our ability to take that knowledge and convert it into the actions that we need them to do to promote their long-term financial independence that AI cannot replace.”
