Half of Americans get financial advice from AI, but is it any good?
A TD Bank survey found that 55% of Americans now use AI for financial advice, up from 10% in 2025, surpassing the 40% who consult human financial professionals. Researchers from MIT and Stanford discovered AI provides sound but limited advice, excelling with well-informed queries but struggling with nuanced financial concepts like rebalancing or consumption smoothing, potentially leading to a 5% lower return for less financially literate users.
A recent TD Bank survey revealed that 55% of Americans now turn to AI for financial guidance, a sharp rise from just 10% in 2025. This marks AI as a more popular financial adviser than human professionals, with only 40% of Americans consulting certified financial planners, according to a 2025 Gallup poll. The shift raises concerns about accuracy, as AI chatbots are known to produce incorrect or fabricated information, a risk that could impact trillions in savings and investments. Researchers from MIT and Stanford analyzed 1,000 user-generated financial queries fed into AI chatbots to assess the quality of responses. Their findings, published in a working paper titled *AI Financial Advice: Supply, Demand, and Life Cycle Implications*, showed AI generally provided sound advice—such as saving for emergencies, investing in low-cost index funds, and avoiding risky assets as age increases. However, the study highlighted significant limitations, particularly in addressing complex financial strategies like portfolio rebalancing or consumption smoothing. The quality of AI advice varied sharply based on the user’s financial literacy. When researchers compared responses to queries from individuals with low versus high financial literacy, they found that more informed questions yielded smarter answers. Simulating investments based on AI responses, they determined that users with high financial literacy could earn roughly 5% more over time compared to those with lower literacy levels. The study’s lead author, Taha Choukhmane, an assistant professor of finance at MIT Sloan School of Management, noted the rapid adoption of AI in financial decision-making. He cautioned that while AI may be useful for those with some financial knowledge, it may not be equally beneficial for less informed users. The findings suggest AI could deepen existing disparities in financial outcomes, as those already familiar with financial concepts may gain more from its guidance than others. The research underscores the need for caution when relying on AI for financial planning. While chatbots offer accessible and quick advice, their limitations—particularly in handling nuanced or personalized financial strategies—could lead to suboptimal decisions for many users. Experts, like certified financial planner Luke Delorme, warn against blind trust in AI, emphasizing the importance of human oversight in critical financial matters.
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