Don't ask AI for financial advice ... unless you're doing it like this expert suggests

It’s all very well asking AI for explanations of simple concepts, assistance with writing emails or help solving maths problems, but should we also trust it enough for financial advice?

An increasing number of experts in the field say “Yes”, pointing out the legal protections in the system to safeguard a brave new world of wiser investments, although advising that it’s always smart to be cognisant of risk.

Tips for using AI to generate property advice

“It is possible to use technology to generate financial advice in a way that’s very safe and reliable, but there is the question of how you do that,” says Zein El Hassan, partner – financial services with national law firm Mills Oakley. “There is a danger in going onto a large language model like ChatGPT and just asking for financial advice that may not be appropriate for you, or based on information that’s out of date or calculations that may be inaccurate.

“But if AI is used together with advice generation engines, like Otivo, that propagate algorithms and calculations using pre-planned materials and a smaller subset of information, that could generate advice you can rely on.”

In addition, if the AI is used to compare real estate investments with shares, super, managed funds and so on, which are financial products, then the provider of the AI will be subject to financial services laws under the Corporations Act, El Hassan says.

Further, any information, guidance or advice concerning real estate must comply with consumer protection laws prohibiting misleading and deceptive conduct.

What tool should you consider?

Otivo, a new AI-powered digital advice tool, built on existing digital tools in use by finance company Colonial First State, and vetted by accounting firm KPMG, was launched in February and is currently creating a huge amount of buzz in the industry.

It focuses on strategic decisions, like whether to pay down debt or invest in new property. To provide answers, it first asks the user a series of questions about income and expenses, assets and liabilities, dreams and aspirations, to make sure it grasps each individual’s circumstances.

Founder and chief executive of Otivo Paul Feeney says, “It then talks about, and rates, various investments for you, while making sure to preserve cash flow. For many Australians, this can be an area that’s complicated and confusing, but this provides the tools to make the best of any financial life.”

Are AI tools becoming more popular in the property industry?

With the AI sector expected to grow from a $200 billion industry today to over $1 trillion by 2030, it also has plenty of other value within the property investment space.

AJ Financial Planning founder Alex Jamieson says it can make searches for desired property so much easier, giving you, for instance, a list of suburbs within a 10-kilometre radius of any capital city CBD. Then you could add accessibility to public transport, growth prospects, upcoming infrastructure, median prices.

“You can delve into the suburbs you might like or other criteria you may find important,” says Jamieson. “You set the parameters and can ask about stock availability, vacancy rates, anything.

“You can trial different AI platforms, but often it’s a question of perfecting the questions you ask, your prompts, to receive the best answers.”

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