Young Australians are trusting AI for financial advice. But chatbots can fail in 3 ways
If you do use AI, treat its answers as a starting point. Ask for sources, check them against Moneysmart, and keep your account details out of it.
Recent research indicates that more Australian investors aged 18 to 29 are seeking investment advice from artificial intelligence (AI) tools than from human financial professionals. According to the Australian Investor Study conducted by the Australian Securities Exchange, 24% of young investors used an AI tool in the past year, compared to 19% who consulted a financial planner or adviser.
The likelihood of using AI declines with age, with only 6% of 50 to 64-year-olds and 1% of those over 65 relying on AI for investment advice. AI chatbots are appealing to this demographic due to their accessibility, cost-effectiveness, and non-judgmental nature. However, there are three key areas where AI can fall short compared to human advisers.
First, chatbots can provide confident but incorrect information due to outdated training data or misinterpretation of web sources, a phenomenon known as AI hallucinations. Second, users must share their financial details with the chatbot, which may lead to unintended storage or misuse of personal data. Finally, AI providers do not have a legal obligation to act in users' best interests or provide written advice, leaving no recourse through complaints or compensation schemes.
While AI can offer a sense of security and confidence to young investors, it should not replace professional advice, especially when seeking to invest in shares, ETFs, or cryptocurrencies. Young Australians are increasingly turning to retail investing as a primary wealth-building strategy and seek reassurance from AI. However, the lack of regulation for AI tools leaves young investors vulnerable to misinformation and potential financial harm.
It is essential to establish affordable, licensed advice options tailored to Gen Z's investment habits to prevent them from relying solely on unregulated AI.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
