In most of the interviews or podcasts I do today, I get asked, “A lot of people are using AI for personal finance. Is this healthy?”
Change is inevitable. In the three years that AI assistants were introduced one after the other, they have become a part of our lives. A few months ago, I described on YouTube how AI assistants like Perplexity have made my teaching easier.
Is using AI for financial planning or personal money management harmful? To answer this with the right perspective, we must ask what we were doing before 30th Nov 2022 (when ChatGPT was introduced – yes, I used AI to find this out!).
Were we doing extensive research using Google or Bing to analyse mutual funds, stocks, retirement planning, or to understand our health issues, etc.?
The honest answer for most of us is a big no. Most of us only skimmed the surface, using search summaries and not going past the first few search results. In fact, a majority of search queries were “zero-click”; that is, Google provided the answer without the need to visit a web page.
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Google’s transition from a search engine to an answer engine started in 2005 with Google My Business. In 2019, about 50% of searches were zero-click. This rose to 2/3rds in 2020! With AI summaries, this increased to nearly 60% in 2024.
Most users have no idea how to do thorough research. Nor are they interested. They want quick answers, and Google has given them that, with or without AI. Even in 2020/19, only 28.5% of users clicked the first search result, and the percentage for further results quickly dropped.
The advent of AI summaries and AI assistance is a blessing for lazy searching. Without leaving the search engine or going to the “AI mode” tab, I can access obscure search results, and we have to admit that, most of the time, AI gets it right for factual queries.
Yes, it does go wrong, and most importantly, it is unable to say “I don’t know or I don’t know enough”, probably because it is probability-based (only a guess, happy to stand corrected).
Yes, we should investigate the sources that AI uses. But did we do that for the zero-click searches before the advent of AI? The truthful answer is that we trusted Google most of the time. And now we have extended that trust to AI.
My point is that nothing terribly bad has occurred with the advent of AI assistance. We were lazy before, and we are lazy now. If anything, AI assistance has made our searches more productive and more balanced, often unearthing obscure links we would never have looked at in the pre-AI era.
Shopping has shifted to AI. I purchased a mechanical keyboard by asking AI. I used AI to list hotels for conducting the next Fee-only India meeting. I regularly use it for teaching. AI has answered my questions about my medical condition better than my doctors! Then why can’t I use it for financial planning?
Most financial planning is formulaic, and AI can handle retirement planning and goal-based investing quite well. As always, my assumptions and expectations should be reasonable. This is true of Excel as well.
As long as I can do a little bit of double-checking, I think AI is emerging as a low-cost, conflict-free, fee-only advisor.
Yes, there is a danger in asking AI, “Which are the best mutual funds?”, “which stock should I buy?” and so. But the fault lies in the question, not in the answer. And in any case, such search queries were popular in the pre-AI era. If anything, the AI result is far more responsible than a search engine listing a “SEO optimised” title with “best stocks” in it.
I strongly believe AI is a change for the better. It has made our lazy searching more productive, balanced and responsible. Let’s embrace it and ask it intelligent questions with the necessary due diligence.
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Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 14 years of experience publishing news analysis, research and financial product development.
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