There is an app for everything these days. But when it comes to our money, how much should we rely on technology to help us make informed financial decisions?
Atif Ikram is a clinical professor of finance with expertise in corporate finance and a passion for imparting financial education through his course FIN 123: Money Matters. With the use of AI-powered financial tools on the rise, he believes personal finance education is more important than ever.
"Not too long ago, young people’s options were limited to basic budgeting apps or spreadsheets for tracking expenses and spending," Ikram says. "Today, many of these individuals interact with ChatGPT as they would with a financial advisor, getting instant answers to anything from how to manage their expenses or credit card payments to more complex questions on tax planning or insurance."
For better or worse, generative AI has transformed how people manage their money. In recognition of National Financial Awareness Day on Aug. 14, Ikram spoke to ASU News about emerging trends in money management and what to consider before implementing AI into your financial planning.
Question: How has AI changed how young people manage their finances?
Answer: AI has fundamentally democratized financial planning, providing people with access to a wide range of AI-powered financial planning apps and tools. Apps like Cleo offer personalized financial advice through engaging interfaces, while AI assistants from companies such as Arta Finance offer advice using Gen Z slang. Many banking and finance apps, like Acorns, use AI-powered algorithms to help people automate savings, manage investments and create personalized debt repayment plans. Even robo-advisors like Betterment and Wealthfront have evolved from providing simple portfolio management to more comprehensive financial coaching. The barriers to making wise financial decisions have lowered considerably over the past few years, fundamentally changing how an entire generation approaches money management.
Q: What risks should students take into consideration when implementing AI into financial planning?
A: While AI's capabilities are fascinating, there are considerable risks in using AI-powered tools to make important financial decisions. It is well documented that AI frequently "hallucinates," and I've witnessed students receiving outdated tax advice or making inappropriate investment decisions because they relied entirely on ChatGPT without verification or provided incomplete prompts. A related concern is overreliance on technology at the expense of developing critical financial literacy, as many students will forgo learning the fundamental knowledge needed to validate ChatGPT's outputs. This unbalanced tech reliance can create a dangerous dependency where they can't distinguish good advice from bad.
Data privacy is another serious risk. I've heard of students feeding ChatGPT their bank statements and social security numbers to generate a personalized financial plan. What they don't realize is that when they do this, their data enters a vast digital ecosystem that is susceptible to breaches and less subject to privacy protection compared to established financial platforms subject to regulatory oversight.
Perhaps most critically, current AI lacks fiduciary responsibility. Unlike human advisors legally bound to act in clients' best interests, AI systems can inadvertently provide advice benefiting platform providers. This is why I always tell students to use AI as a research assistant and an educational tool, not as their sole decision-maker for significant financial choices.
Q: How do you foresee the role of financial education evolving alongside these AI tools?
A: Some people believe AI will eliminate the need for financial education, like how calculators supposedly eliminated the need to memorize multiplication tables. I disagree. Rather than reducing the need for financial literacy, AI makes specific core competencies more critical than ever. Students need to learn AI literacy alongside traditional financial knowledge. They need to understand how to craft effective prompts, evaluate responses critically and recognize tool limitations. AI is a tool — students need to know how to use it, but they cannot effectively do that unless they understand what the tool does and how it works.
Still, the personalized learning potential of AI is remarkable. AI can adapt explanations to different learning styles, provide real-time feedback on financial simulations and offer culturally relevant examples. This evolution demands that educators focus more intensively on critical thinking, ethical decision-making and nuanced judgment that AI cannot replicate. I predict that financial education will transition from merely imparting financial education to teaching students how to use and think critically about AI-generated output and advice.
Q: What are the most, or least, promising AI trends in personal finance over the next few years?
A: To me, the most promising aspect is AI's democratization of financial planning. Historically, only wealthy individuals could access sophisticated financial advice and complex analytical tools. Now, a much broader audience has access to these services. Yes, AI sometimes hallucinates and can make mistakes, but human beings, including financial advisors, aren't infallible either. Over time, as privacy protections strengthen and accuracy improves, more young people will be able to use AI tools to make smart financial decisions.
I'm particularly optimistic about AI's potential to address financial psychology and behavior. Our backgrounds, cultures and upbringings significantly impact our relationship with money. Advanced AI can internalize these factors, correcting human biases while providing personalized plans aligned with individual values and cultural norms. I feel that the next few years will likely bring sophisticated behavioral coaching tools that recognize spending triggers, identify optimal saving moments and provide real-time interventions.
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