What Is Next? An AI Powered Financial Advisor

When we fall ill, we go to a doctor. Even otherwise, we go to a doctor for regular checkups and advice on how to stay healthy. When it comes to our finances, a financial advisor plays a similar role. 

When it comes to financial advice, you can ask your friends and family, but that may not always be a wise thing to do. You can approach your insurance agent or your mutual fund distributor, but in some cases, their advice may be biased. Depending on finfluencers for financial advice may also not always be a good idea. 

One of the best ways to get financial advice is to get it from a Securities and Exchange Board of India (SEBI) registered investment advisor (RIA). These guys will provide financial advice for a fee, but they have a fiduciary responsibility to put your interests first. 

But like a lot of other things, going ahead, artificial intelligence (AI) will play a very important role in how we receive financial advice going ahead. Let us see how. 

AI And Financial Advice 

AI-driven financial advice has shifted the world from the traditional algorithm-based systems that have been used for a long time. “Algorithmic financial advice models work on fixed, rule-based processes such as predefined investment strategies or enabled risk profiles but now AI can adapt and personalise. AI systems don't just execute based on preset conditions, but they learn from the vast amounts of real-time data, identify emerging patterns, and adjust recommendations accordingly,” says Abhinav Nayar, Founder and CEO Mool.AI, a company that uses AI to help people make smart financial decisions.

This dynamic approach enables AI to offer more holistic and forward-looking financial guidance customised to individual needs, preferences, and market conditions, AI-driven systems continuously refine their understanding, making them more responsive to shifts in economic trends or personal financial circumstances, which Algorithm based models can’t.

In fact, going ahead we can expect AI to be your financial advisor. Says Rohit Pandharkar, Partner, Technology Consulting, EY India, “Conversational advisory is where you can go and describe your situation and ask for advice. For example, if you have received a bonus during Diwali, you may want to know how to invest it.  Such answers are in conversations, either with your relationship advisor at a bank, with your mutual fund agent, your insurance agent or with your financial planner. All this will change through conversational advisory agents.”

So large language models (LLMs), a type of artificial intelligence (AI) that can perform natural language processing (NLP) tasks, have created the concept of conversational advisor in personal finance. As we go ahead we can expect to see more sophisticated versions of such tools.

You may want to know how to invest for your retirement, how to ensure enough savings to send your daughter for studies abroad or how to get covered for life and health insurance. You would just need to ask these questions to an AI advisor and you will get proper, unbiased advice. 

AI financial advisors can help solve the problem of not having enough financial experts in India. Many people want personalised financial advice, but there aren't enough advisors to go around. AI can fill this gap by offering affordable, customised advice to more people. This way, AI helps meet the high demand for financial guidance with fewer experts available, making financial planning accesible to everyone.