VIDEO: Why AI Isn’t the Best Answer for Your Finances
By Joe Dowdall, CFP®, RICP®, CRPC®, CCFC
As AI and robo-advisors gain popularity, relying on them for financial decisions might seem convenient. But when you’re faced with complex situations or unpredictable economic shifts, having a trusted financial advisor becomes an invaluable resource. Watch this quick video to learn the benefits to partnering with a financial advisor compared to a robo-advisor.
Transcript
Introduction to Financial Planning
Growing up, one of my favorite pastimes was going to the movies. I believe I grew up during the golden age of cinema—I think everyone feels that way about their teenage years. One film that truly captured my admiration was Terminator 2, particularly Arnold Schwarzenegger’s iconic role as the Terminator. His portrayal and unforgettable lines made a lasting impression on me, not to mention the fantastic soundtrack.
The Role of Technology in Financial Planning
As I prepared for this discussion, I considered the fascinating capabilities of robots and artificial intelligence. However, when it comes to financial planning, is relying on a machine really the best approach? Would you want “I’ll be back” to be your financial advisor? I think not.
Importance of a Human Touch
Before diving deeper, let me introduce myself—I’m Joe Dowdall, a financial planner at Worth Asset Management. I assist clients in building and implementing tailored financial plans, focusing on protecting them from tax pitfalls, laws, and surcharges that often affect retirees.
So, back to the question: Is it wise to use artificial intelligence or robo-advisors when dealing with complex financial situations? My answer is no. While there is a wealth of information online that continues to grow, I believe that working with a human financial planner offers the best strategy.
Robo-advisors can be beneficial for those just starting out or managing simpler financial situations. However, as your financial landscape becomes more intricate, it’s time to upgrade to a human advisor. These certified professionals possess years of expertise and stay informed about the latest financial trends, offering the most relevant guidance.
The Value of Empathy in Financial Planning
In Terminator 2, Schwarzenegger’s character learns that he could never be human; he is, after all, a robot. This distinction highlights the value of working with a human financial advisor. Robo-advisors are constrained by algorithms and code, relying on data points such as your risk tolerance and investment horizon. In contrast, a human advisor takes a holistic approach, learning about you and your unique circumstances.
Human advisors provide emotional understanding, recognizing that finances are not just a logical matter. Each client has a personal connection to their goals, objectives, and finances. During times of economic uncertainty, emotions like fear or stress can cloud judgment, while positive times may lead to carelessness. A human advisor can guide you through these emotional phases, providing clarity for informed decision-making.
Providing Accountability
In the movie, Schwarzenegger had the hardware to hold you accountable, but when working with a human financial planner, accountability is equally crucial. If you’ve struggled to stick to your financial plan, a financial advisor can help by establishing a budget, tracking expenses, and monitoring your progress toward goals. They keep your objectives in mind when you consider other financial decisions, such as weighing the pros and cons of purchasing a luxury item versus a significant investment.
When to Upgrade to a Human Advisor
While there are basic scenarios where a robo-advisor or AI is suitable, as your financial situation grows in complexity—especially if you’re preparing for retirement—it’s essential to transition to a human financial advisor. At Worth Asset Management, I specialize in helping individuals plan for retirement, focusing on financial goals and navigating potential tax pitfalls.
If you’re interested in setting up a free, no-obligation 15-minute phone call to see if we are a good fit, please call me at 469-423-1989 or email me at joe@worthassetmgmt.com. I’m here to help. Thank you.