Canadians should be cautious using AI for financial planning, experts say
'It's a personal financial assistant,' said Martin Dasko, a content creator focused on personal finance.
One way Dasko uses AI is to set up savings plans for upcoming vacations by giving ChatGPT a prompt about his savings target and asking for a plan on how to achieve that amount within a specific timeline.
'It'll give you a monthly plan to follow,' he said. 'It's all in one spot … You can get a table, a chart and it's easier than ever.'
In the age of do-it-yourself investing and robo-advisers, AI chatbots have become another go-to for many young Canadians to set up budgets and map out financial goals. But experts say you need to have a solid sense of your finances first in order to get suitable answers.
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'There is a little bit of work that the individual needs to do to be confident and accurate in the numbers that it produces,' said Sun Life financial planner Katelyn Aitcheson of AI chatbots.
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That means knowing the basics such as the difference between your fixed and variable expenses, recurring versus one-time expenses and even what your net worth is.
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Aitcheson recalled a client who recently bought a new home and turned to a generative AI chatbot to help decide whether to get life insurance or mortgage insurance for the house.
'It did give her a high-level overview of the differences between personally-owned life insurance and mortgage insurance,' Aitcheson said. But the AI response was missing the nuances.
The chatbot didn't tell the client that she could buy additional insurance coverage to cover income replacement or that she could potentially reduce her coverage in a personal life insurance policy over time, Aitcheson said.
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Still, AI chatbots are finding a place in managing everyday money.
'For a lot of people, the ability to grab some basic information very quickly and easily, and kind of cut through the noise, I think, is very powerful,' Aitcheson said.
She said the technology can offer a fairly accurate breakdown of money allocation for financial goals such as saving for retirement or paying off a student loan — or at least putting a user on the right path.
Dasko said the most common prompt people can use is: 'Help me create a monthly budget with (insert) income and (insert) expenses.'
AI would then offer a budget style people can choose from, he said.
Then, Dasko suggested customizing the plan with prompts such as: 'Where can I cut $100 to start saving more?' or 'Help me save $10,000 in the next year,' and 'What's a realistic monthly plan, or weekly plan or quarterly plan?'
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But it's not always safe to ask AI questions that may contain sensitive information, Check Point's cybersecurity evangelist Jane Arnett warned.
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Canada doesn't yet have any legislation protecting AI users, and it's hard to know how the data is stored or used.
'Stop and think: 'Okay, with this that I'm putting in here, what would happen if I was giving this to someone who was trying to rob me right now?'' Arnett said.
'Basically, assume that anything you're putting into these systems is public information,' she said.
She also cautioned that users might receive incorrect or half-baked information if the prompts aren't specific enough.
'You could end up with advice that is wrong, that is maybe for people in the United States but doesn't apply to people in Canada, maybe advice that's outdated,' she said.
Arnett suggested verifying the information or financial plan spat out by the AI chatbot with a human financial adviser.
'You'll walk in knowing more and having a better and deeper conversation with your financial planner,' she said.
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