Should you rely on a robot to plan your finances? How much should you manage yourself, and what role should a human adviser play in your goals and strategy?
Artificial intelligence (AI) is still taking the world by storm, with the arrival of DeepSeek (China’s new competitor to US-based OpenAI) shaking the markets in January 2025. In this article, we examine the potential role of AI in financial planning based on what we know so far.
AI in finance
At present, most financial firms are still in the early stages of AI adoption. Firms are keen to improve efficiencies with new technology, but they also need to ensure their clients’ interests are protected (e.g. data security and privacy).
There are also regulatory issues for firms to navigate. In the EU, for instance, the “AI Act” is set to come into force in the summer of 2025. This defines two high-risk use cases for the financial sector: evaluating creditworthiness for individuals and risk assessments for life insurance.
Take the first one. AI could significantly improve firms’ ability to assess creditworthiness using advanced data analysis, machine learning, and alternative data sources. Traditional credit scoring models, like FICO or VantageScore, rely mainly on credit history (which may not give the full picture of an individual’s risk level). AI could enable a more accurate and fair assessment of a person’s ability to repay a loan.
However, AI models risk inadvertently reinforcing existing biases if trained on biased historical data. Features like ZIP codes, employment history, or educational background can unintentionally act as proxies for race, gender, or socioeconomic status, resulting in biased credit scoring.
What about financial planning?
Similar opportunities and risks can be found when considering the role of AI in financial planning and investment management.
Let’s take the client onboarding process as an example. Traditionally, when someone starts the financial planning process, it begins with establishing the client-planner relationship. The parties meet, build trust and work out if a mutual “fit” exists.
Expectations and responsibilities are set, and a fact-finding session then takes place to work out the client’s current position – as well as their short-term, mid-term, and long-term goals. “Gaps” and risks are identified, and a detailed financial analysis is eventually produced – highlighting strengths, risks, and opportunities for improvement.
A customised financial plan is built to align with the client’s goals. The result is a personalised “roadmap” with actionable recommendations. With the client’s approval, the professional puts the plan into action. Strategies are actively applied to achieve their goals. Over time, progress is tracked, and adjustments are made as financial circumstances change.
Can AI emulate this process? Certainly, it has the potential to analyse large volumes of financial data at unprecedented speeds. This could be very helpful when making investment decisions – i.e. identifying market trends and investment opportunities using predictive analytics. Here, the need for manual research efforts could be reduced, possibly resulting in cost savings that could be passed down to the client.
However, there are still many issues with AI that still limit its application to financial planning. In particular, financial planning involves sensitive personal data. AI systems that store and process this data face cybersecurity threats, including hacking and identity theft. There is also the risk of data breaches exposing confidential financial details.
AI also lacks the human touch needed for complex financial decisions. Think about those times when you wanted customer support from a company only to face AI-powered chatbots and pre-written articles (“I just want to talk to a human!”).
AI cannot fully understand the emotional and psychological factors affecting financial choices. Robotic tools also may not account for unexpected life events (e.g., job loss, illness). Here, you often need a human financial adviser to guide you and provide an informed second opinion.
The future of AI
Does AI have a future in financial planning? Certainly, new technologies are redefining the landscape. Change will be hard to resist, and firms that fail to adapt may be left behind.
One possibility is that “hybrid” models will gradually emerge as AI is more regulated and its pitfalls are ironed out (e.g. data privacy and security concerns). For instance, if an AI powers many investment decisions behind a client’s portfolio, a human adviser could provide continuous oversight and review.
The human touch is, in our view, an indispensable part of financial planning. Whilst AI could help advisers work faster by analysing data, it cannot offer the emotional intelligence needed to guide clients through emotions like fear, greed, and uncertainty—critical for long-term financial success.
Invitation
Many financial situations involve nuances AI algorithms cannot fully understand, such as blended families (how should assets be divided fairly?) and business succession planning (when is the right time to sell or transfer ownership?).
If you’d like to make sure you’re taking the right steps to safeguard your financial future, please get in touch.