Nick Holeman, Director of Financial Planning at Betterment, advises caution when using artificial intelligence for personalized financial advice. “I would be cautious about using it for personalized financial advice right now,” Holeman said. “We’re seeing a lot of traction with general financial education.
In that case, it’s a brilliant tool. But using it for personalized financial advice, I don’t think it’s quite there yet.”
Betterment, a digital advisory company, helped pioneer robo-advising but does not currently use AI for financial advice. “We’re looking into it.
We’ve seen a lot of promise, but it can act a little bit odd when you start to get into some really technical details,” Holeman explained. AI “hallucinations” – confidently stated inaccuracies – are improving but remain a concern.
Caution advised for AI financial advice
“Large language models weren’t really built to do math,” Holeman said. “We’re seeing that get a little bit better as well, but there’s still a bit of concern there.”
However, Holeman acknowledged that AI can be helpful for users who understand financial terms and prompt design. “Prompt engineering is important, and it’s worth exploring because many investors don’t even know what to ask,” he said.
Even savvy AI users and financial advisers would be wise to proceed with caution, especially given potential tax changes and the rapidly evolving political environment. Holeman noted that Betterment advisers have observed an increase in client conversations about the impact of political uncertainty on investment decisions. “We are seeing an uptick in investors being nervous,” Holeman said.
“Our investors have been very well-behaved with their retirement portfolio. We’re not seeing mass panic or sellouts of their existing nest egg, but we are seeing them hold on to cash for a lot longer than usual.”
Holeman encouraged people to “think like an engineer” when approaching financial decisions. Instead of defaulting to vague answers, he urged people to identify clear inputs, calculations, and expected outcomes—an approach he said helps demystify and improve the consistency of financial advice.
