That is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the fashionable money lessons you NEED to know. Don’t miss the following issue! Join at money.com/subscribe and join our community of 160,000+ Scholars.
As someone who watches a whole lot of TV, I like a very good plot twist.
The moment in season one among Westworld where the audience finds out that Bernard is a [REDACTED]? Nuts! When Eleanor has the epiphany that what she thought was The Good Place is definitely [REDACTED]? Wild! And the reveal that [REDACTED] was Gossip Girl all along? Absolutely bananas!
I’m such a plot twist fan that I’ve come to expect them each time I start a recent show (which, yes, sort of defeats the aim). But I never thought I’d encounter a plot twist while writing Dollar Scholar.
Last month, I started reporting this issue about ways I could incorporate artificial intelligence (AI) into my funds, only to find that it’s BEEN HAPPENING THIS WHOLE TIME. (Sixth Sense vibes.) In some way I just never realized it.
Welp, let’s dig in.
Can I take advantage of AI to get ahead financially?
You almost certainly do not forget that ChatGPT, which uses natural language to reply prompts, all but broke the web when it launched in fall 2022. The chatbot has proven tricky to make use of for financial purposes, though. Horror stories abound about ChatGPT’s inaccurate calculations, hallucinations and challenges with lack of context. Even when it does give solid financial advice, it only provides general suggestions — nothing individualized, which is essential in personal finance.
The general public has caught on. In a 2023 CNBC survey, just 37% of Americans said they were eager about having AI help them manage their money. A separate poll from the CFP Board found that 51% of investors said they’d little to no trust in advice received from generative AI.
Not all artificial intelligence is created equal, though. Jennifer White, senior director for banking and payments intelligence at J.D. Power, emphasizes that the term “AI” encompasses a wide range of products with a wide range of implementations.
“ChatGPT gets all of the main target now. It’s the brand new shiny thing that everyone talks about,” she says. “And that’s an application of using big data and computing capability to be able to produce output. However it’s only one application.”
For example, White says, AI can do so much in relation to culling data, identifying behaviors and using that information to personalize experiences or provide recommendations.
And here’s what blew my mind: That is already happening.
Like, right away.
“Quite a lot of the businesses that you simply already work with are using AI — and have been using AI — for a very long time to research the information of what you may have been doing,” says Spencer Betts, an authorized financial planner with Bickling Financial Services.
Although I can have envisioned opening up the ChatGPT website and typing questions on retirement right into a box, I’m actually way more prone to encounter AI through financial institutions like Fidelity, Bank of America and Vanguard. Betts says these corporations have been using AI internally for years to research my spending and saving.
Once I began looking, I discovered examples of this in every single place.
In 2021, USA Bank rolled out a Pay Yourself First tool that used AI to mechanically discover ways customers could lower your expenses based on their money flow patterns. Bank of America has an AI assistant called Erica that has seen 2 billion interactions since 2018. Schwab unveiled an AI-powered product in 2022 that helps individual investors pick stocks that align with a certain theme.
“I do not think the AI tools are intelligent enough to be predictors,” says Betts, also a CFP Board ambassador. “I feel they’re superb analyzers of knowledge, predictors of where data ought to be.”
Now that I actually have this information, there are several ways I can take that AI data evaluation to the following level.
One is budgeting. Betts says the bank where I actually have my checking account probably tracks all my spending, which implies it may possibly call upon AI to categorize those transactions. It’ll show me easy things like how much I spend on eating out at restaurants versus cooking at home, often with easy-to-understand charts. Then, if I’m unhappy with the outcomes, I can adjust my habits accordingly.
Could I do that myself with paper, a highlighter and a listing of my transactions? After all. But this protects me effort and time, that are two major hurdles to getting myself on a budget. The less friction, the more likely I’m to do it.
One other super useful application lies as compared. Financial institutions can use AI evaluation to check my behaviors with people in my same age range, income level or geographic area, which will help give me an idea of whether I’m heading in the right direction to satisfy goals.
That may ultimately be the push I would like to, say, beef up my investment portfolio or increase my 401(k) contributions.
“The massive thing that AI is doing for our industry is interpreting huge amounts of knowledge and giving us perspective,” Betts adds. “[It can] tell people, ‘That is where the Joneses are; that is where you’re. Here’s three steps to get you from where you’re to where you wish to be.’”
Prefer it or not, AI has already made an impact on my life. Firms I do know, trust and have used for years are counting on AI to research data and make suggestions for my money.
So while I could also be skeptical of ChatGPT (or Gemini or Copilot or whatever the newest iteration is), I shouldn’t write off AI entirely.
“Those tools may very well be used to assist you to see patterns in data that you simply, frankly, have not been trained to search for yourself,” White says. “That’s where the facility lies.”
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