The use of AI for personal finance advice is rapidly increasing, with some 28 million UK adults using AI tools in 2025. A study by Fidelity International found that 36% of 18-34 year olds use AI for investment choices, compared to 29% of 35-54 year olds and 5% of those over 55. While AI can empower individuals with financial knowledge, experts warn of its susceptibility to mistakes and lack of accountability, contrasting sharply with regulated financial advisors who have a fiduciary duty.
AI tools are not regulated under UK law, and the Financial Conduct Authority emphasizes that consumers should conduct their own research and consult trusted sources. Financial professionals like David Horowitz from Gerald Edelman have observed AI platforms incorrectly calculating contribution headroom, potentially leading to unforeseen tax charges. Specificity in queries is crucial, as AI may offer unsuitable advice without details on income, tax position, or risk tolerance. For instance, an AI once advised a user to move to Monaco to reduce their tax bill, a practically useless suggestion for someone employed in Croydon.
Ethical concerns also surround AI, particularly regarding data privacy. Conversations with AI chatbots are often collected to train large language models, making them far from private. Elle Farrell-Kingsley, an AI advisor, notes that free tools often have a “trade-off,” where users' personal data, including sensitive banking details, are compromised. While AI can be helpful for simple tasks like budgeting, experts caution against using it for advanced decision-making, such as stock picking, as this is where costly errors can occur. Cross-referencing AI advice across multiple models and consulting human experts for discrepancies are recommended strategies to mitigate risks.
Despite concerns, some AI platforms demonstrate higher accuracy. A November study by Which? ranked Perplexity, Google Gemini AIO, and Gemini among the top for accuracy, relevance, and ethical responsibility. However, the rapid pace of AI development means these rankings can quickly become outdated. Experts like Farrell-Kingsley suggest that Anthropic's Claude could also rank highly for trust and user satisfaction, despite not being in the initial Which? study. The Mills Review is currently examining the long-term impact of AI on retail financial services, with findings expected to be published this summer.
