The popularity of AI tools for financial guidance has surged, with Lloyds Banking Group reporting that 28 million UK adults used AI for personal finance advice in 2025. ChatGPT was the most frequently used AI tool for this purpose, with 60% of surveyed individuals seeking financial advice from it. This trend is particularly prevalent among younger retail investors aged 18 to 34, with 36% in this demographic utilizing AI for investment support, compared to 29% of 35-54 year olds and 5% of older individuals.
However, experts caution against over-reliance on AI for financial advice, highlighting that AI does not reason like humans but rather generates plausible language based on training data. This can lead to outputs that are technically reasonable in isolation but fall apart in real-world contexts, as exemplified by an AI advising a user to sell holdings, which would have triggered an unnecessary tax event. Unlike regulated financial advisors, AI tools have no fiduciary duty, offer limited recourse for inaccurate advice, and are generally not regulated under UK law, prompting the Financial Conduct Authority to advise consumers to conduct their own research.
Key concerns include the potential for costly mistakes if specific details like income, tax position, time horizon, or risk tolerance are not provided. Furthermore, sharing personal financial information with chatbots carries significant privacy risks, as these conversations are often collected to train large language models, potentially exposing sensitive data like banking details. Experts like Farrell-Kingsley advise caution for advanced decision-making, suggesting AI is better suited for budgeting or understanding investment basics rather than high-risk choices like stock picking.
To mitigate risks, experts recommend specificity in requests and cross-checking answers across multiple AI models. While AI can empower individuals with financial knowledge, users must remember it is a tool, not an authority, and is susceptible to errors. The Mills Review is currently examining the long-term impact of AI on retail financial services, with findings expected to be published this summer.
