5 Concerns Investors Have About Generative AI in Financial Advising—and What to Do About Them

From Frankenstein to Wall-E, humans have long grappled with fears of the effects of technology.

Even though a dystopian financial future is unlikely, advisors would be remiss to assume they can use generative artificial intelligence in their practice without considering the concerns clients may harbor.

In our recent study, we asked clients what kinds of safeguards they want for generative AI in financial planning. From their answers, we identified five common concerns about the role of generative AI in financial planning.

Fortunately, with understanding and care, advisors can reap the benefits of generative AI while still alleviating any issues clients may have around it.

Investors Worry About Their Data and Privacy

Investors expressed concern regarding how their privacy and data would be protected when advisors use generative AI.

In general, people have demonstrated hesitancy about generative AI due to a lack of clarity on how the technology handles their privacy—which in some cases has led to it being wholesale banned. Given this general concern, it’s no surprise this issue appears when considering how generative AI may be used in a field, such as financial advising, that requires access to a lot of personal and sensitive data.

What advisors can do to address privacy concerns: Advisors should ensure they are using the licensed, business version of a given generative AI tool. Such a licensed tool will provide contractual protections to the data provided by the advisor when using the generative AI. This means client data will be protected, and advisors will be able to talk to clients about how they’ve addressed the issue.

Investors Worry About Transparency

Investors identified concerns about whether their advisor would be transparent with how they’re using generative AI.

A growing norm in the new era of generative AI is to disclose when AI has been used (such as how social-media companies have started tagging AI-produced content). Not surprisingly, investors also indicated a desire for advisors to provide clarity about when they were using generative AI, as their financial future is linked to advisors’ decisions.

What advisors can do to provide transparency: Advisors should develop disclosure statements for clients. This ensures advisors have a standard process for informing clients of how generative AI is used in their practice. Furthermore, advisors can cultivate trust with their clients by proactively disclosing this information to them, instead of leaving them guessing.

Investors Worry About Oversight

Investors indicated they were worried about a lack of human oversight in advisors’ use of generative AI.

AI is far from infallible and is prone to hallucinations—that is, making things up. While hallucinations can be funny when using generative AI for smaller tasks, people are understandably concerned about the potential for these errors in their financial lives, where such errors could have catastrophic outcomes.

What advisors can do to ensure human oversight: Advisors should have a codified workflow for when humans review, edit, or contribute to generative AI output as well as standards for evaluating the content. Such procedures provide the dual benefit of helping clients rest easier about the use of generative AI and ensuring high-quality work.

Investors Worry About Agency

Some investors had concern about how much control they had over the use of generative AI in financial advising.

Not all people are comfortable with generative AI being used for any given task. And although advisors may try their best to make clients comfortable, some clients won’t be comfortable without having a say in how generative AI is used with their account.

What advisors can do to give clients agency: Advisors should consider giving clients the opportunity to opt out of generative AI being used to complete tasks related to them and their data. People tend to stick with default options unless they have strong preferences. Letting clients opt out will ensure clients resistant to generative AI will remain comfortable with you and will give additional peace of mind to others that they can change their mind if they want to.

Investors Worry About Bias

Investors expressed concern over the bias in generative AI that may surface in the financial planning process.

Generative AI has many documented biases, such as amplifying more readily available information instead of the most rigorous or relevant information. This has many investors concerned about how they can be sure decisions supported by generative AI are in their best interest.

What advisors can do to combat bias: Advisors should check for bias as part of the workflow they use to evaluate generative AI outputs. Doing so should involve identifying what information is being used to inform the output and whether this is appropriate for your client. Having a clear procedure for ensuring the best interest standard is upheld when using generative AI will help build trust with clients.