7 months ago
Risks of Using AI Chatbots for Investment Advice
AI chatbots are becoming popular for helping with everyday tasks, including investment advice.
However, using them for financial decisions can be risky.
Chatbots don't have the same responsibility as human advisors and might not consider your personal needs.
They can suggest investments based on popularity or marketing, not what's best for you.
Experts warn that investors should use AI chatbots for learning and narrowing down options, but not for making final decisions.
Always verify recommendations with a registered advisor to ensure they fit your goals and risk profile.
AI chatbots are increasingly used for investment advice, but they lack fiduciary responsibility and accountability.
Investors are bringing AI chatbot recommendations to financial advisors for comparison and verification.
Brands are optimizing their content for AI answers through AEO/GEO to rank higher in chatbot responses.
AI chatbots may suggest investments based on visibility and repetition rather than individual needs.
Experts advise using AI chatbots for learning and narrowing down options, but not for making final investment decisions.
- Who
- Investors and AI chatbots like ChatGPT, Google Gemini, Microsoft Copilot, and Claude.
- What
- The risks and limitations of using AI chatbots for investment advice.
- Where
- Globally, with a significant focus on India due to high retail participation and AI usage.
- When
- Currently, as AI chatbots are increasingly being used for investment queries.
- Why
- To understand the potential dangers and lack of accountability in AI-driven investment advice.
Key facts
- AI Chatbots
- Computer programs using AI to understand and reply to user inputs.
- Popular Examples
- ChatGPT, Google Gemini, Microsoft Copilot, Claude.
- Investment-Related Queries
- Among the most frequent and high-engagement prompts in India.
- Accountability
- AI chatbots lack fiduciary responsibility and are not regulated by SEBI.
- AEO/GEO
- Answer Engine Optimisation and Generative Engine Optimisation for shaping content in AI answers.
- RBI Warning
- Cautions consumers about AI influencing decisions not aligning with best interests.
- SEBI Consultation
- Focuses on AI inside regulated entities, governance, and accountability mechanisms.
Quotes
Aditya Agarwal
Co-founder, wealthy.in
“If you are keen, ask questions to AI; there is no harm unless you react to it. And he strongly urges investors to always verify recommendations, information, and data through a registered advisor or official scheme documents.”
livemint.com
“It is okay to ask questions like what is mutual funds, what is SIP, old tax regime vs new tax regime etc… They can even ask AIs to simplify newspaper articles or concepts to understand them with ease.”
livemint.com
Goutam Singh
Noida-based AI SEO and digital marketing consultant
“To get your name picked up by AI answers, you first have to build trust using Google’s E-E-A-T Framework… expertise, experience, authoritativeness and trustworthiness.”
livemint.com
“Repeated mentions act like a signal. So if a name keeps appearing for a keyword, the system treats it as important.”
livemint.com
Pramod Sharma
Partner, Citrine Financial Services LLP
“Answers from AI also depend heavily on the quality of prompts and the version you use. Suppose you want it to calculate how much you should invest monthly towards a goal, unless you write a clear prompt hinting it to use a particular formula, or may be using a paid version, the chances of getting wrong answers is high.”
livemint.com
“We had a few cases where investors performed ‘how much SIP is required for ₹X crores’ calculations on them, which were incorrect.”
livemint.com
Ravi Handa
Founder and creator of Handa Uncle, an AI-powered personal finance platform
“While I think AI tools are far superior to commission driven intermediaries, they are no substitute to professional advice that contextualises advice based on a person’s needs.”
livemint.com
“The problem with AI is bulk data-based recommendations. AI will pick up products that rank high on the internet without any context to an investor's need.”
livemint.com
Rushabh Desai
Founder at Rupee With Rushabh Investment Services, a Mumbai-based mutual funds distribution firm
“The quality and timely handholding that an advisor/distributor provides to an investor is not replaceable.”
livemint.com
