FrankenFinance: AI + Advisor Retirement Portfolio Management

David Treece | Jul 31, 2023

Machines can master money tasks, but there's more to financial planning than selecting stocks.

The monstrous growth of Artificial Intelligence (AI) is transforming just about every industry and facet of our lives.

Despite concerns about runaway technology, AI is doing some pretty cool stuff in the financial world. From automating trades to managing portfolios and sniffing out fraud it’s becoming an amazing asset.

Robo-advisors are the poster children for AI in action, using fancy algorithms to manage investments.

But, can AI truly replace the role of a human financial advisor?

Let’s take a look at the pros and cons.

AI's Got Game: The Upsides

Efficiency, Baby! One thing AI's got going for it is its super speed and brainpower. Robo-advisors like Betterment can analyze a gazillion investment options in mere seconds. Meanwhile, a human advisor would probably still be sippin' on their coffee, scratching their head.
Always Available, 24/7: Unlike your human advisor, AI doesn't need sleep. So, if you're a night owl in California and want to make a trade at 2 a.m., no problem! Your robo-advisor's got your back, ready to execute your trades while humans are off in dreamland.
Money-Saving Magicians: AI can be a budget-friendly buddy. Automated advisor Wealthfront charges just 0.25% for its advisory services, which is cheaper than the average human advisor.

But remember, with savings come tradeoffs …

AI: Great, But Not Golden

Missing that Human Touch: AI is smart as heck, but it can't give you that warm, fuzzy feeling like a human can. Say you just got an inheritance, and you're dealing with a whirlwind of emotions and financial decisions. Your robo-advisor may have all the data, but it won't offer a comforting shoulder or personalized guidance. Big data doesn’t know your history, life situation, or goals like a financial advisor who’s built an ongoing relationship with you does.
Complexity Crunch: AI can handle the simple stuff, but when things get real tricky, it might struggle. Think estate planning with all its family dramas and tax puzzles. A skilled human advisor is there to advocate for you and can navigate this maze with finesse, but AI might just get lost.
Change Challenge: When life throws a curveball, humans tend to be more adaptable than AI. During the crazy COVID-19 market rollercoaster, human advisors were there to hold hands and provide reassuring advice, something AI hasn't quite mastered yet in this era of digital transformation.

The Gurus Weigh In

NerdWallet's AI, ChatGPT, can speak human and code like a boss, but it's no therapist! Sure, it can drop some financial knowledge, but when it comes to personalized advice, it's not quite there.

The Motley Fool knows their stuff, and they say AI is great at crunching numbers and giving objective advice. But it's got a tin heart when it comes to emotions. Apparently, 84% of Americans prefer the human touch over cold, calculating robo-advisors.

Mission Wealth's got a point—AI might be a math whiz, but it's lacking in emotional intelligence. If the data it's fed is biased, then its advice might end up a little one-sided, too.

The Verdict: FrankenFinance—A Match Made in Money Heaven

AI is awesome for crunching numbers and automating tasks, but it's not human. For now, it looks like the dream team of the future is a mix of AI and human expertise. They'll complement each other like peanut butter and jelly, and you'll have the best of both worlds.

Don’t be afraid to embrace the innovation of the AI revolution, but don't forget the power of real-world experience and a personal human touch. When it comes to financial guidance about your hard-earned money, human values like compassion and loyalty go a long way.