Americans turn to AI for financial advice but trust remains with human advisors

Turning to AI for money advice has risks, top-ranked advisor says: 'It's ignoring the personal and emotional part of it'

Watch CNBC's exclusive interview with TIAA CEO on AI & retirement investments Artificial intelligence is transforming how people gather information and make decisions -- including on matters of money. In fact, generative AI, which can supplant a human's analytical skills, is taking on the role of a financial advisor for a significant number of adults, recent reports show. Two-thirds, or 66%, of Americans who have utilized a GenAI tool like OpenAI's ChatGPT or Google's Gemini said they've used it for financial advice, according to a September report by Intuit Credit Karma. For Gen Z and millennials, the share is much higher: 82% use it for everything from simple budgeting to more complicated tax planning and investing. "GenAI is a powerful tool for learning, planning, and managing your money," Courtney Alev, Intuit Credit Karma's consumer financial advocate, said in a statement. However, she said, "finances are nuanced and deeply personal."

AI is making robo-advisors smarter. Is that a good thing?

Financial advisors have long held the keys to strategic advice that helps investors manage their money. But AI-powered robo-advisors are changing the game. In 2024, the global robo-adviser market reached $1.4 trillion in value, a figure that's projected to grow to $3.2 trillion by 2033, according to Market Research Intellect. Key players in the market include Betterment, Ellevest, SoFi, Charles Schwab, Vanguard, and Wealthfront, offering investors automated investing solutions and advice at a fraction of the cost of a human adviser. But as more Americans entrust their life savings to algorithms, financial planners are sounding the alarm about what might get lost when human judgment is taken out of the equation. Kevin Estes, founder of Scaled Finance in Seattle, said AI might seem like a convenient shortcut, but it has a clear limitation. "AI is very good at answering the questions that you ask; the challenge is that people may not know the right questions to ask," Estes said. The appeal makes sense, especially to cost-conscious users. They can open accounts and start investing within minutes from their smartphones. Many platforms offer automatic tax-loss harvesting, which can help reduce tax liabilities without requiring investor involvement. For tech-savvy investors, especially millennials, it's a one-stop solution without the hassle of speaking to a human. "I think it's wonderful that the barriers to investing have fallen so dramatically, that the cost of trading, that the access has improved, and that people are getting the ability to have solutions for their investing needs that don't cost nearly as much as they used to." But the convenience and ease of using a robo-advising platform comes with complications. Ohan Kayikchyan, a certified financial planner, money coach and educator in North Carolina, is particularly worried about the lack of transparency surrounding robo-adviser algorithms. "In many cases, they will not make their algorithms public," Kayikchyan said. "In many cases, it's like a black box; we don't know what is inside." He noted that this obscurity makes it difficult for investors to understand why certain stocks in their portfolios are underperforming or when market conditions are shifting. Unlike human advisors who can explain their reasoning and adjust strategies based on nuanced conversations, robo-advisors rely on standardized questionnaires that may oversimplify complex financial situations. "The questionnaires that robo-advisors have are standard, so they are not necessarily catered for your situation," Kayikchyan explained. Risk tolerance, for example, is where human intercession and communication are especially important. "I'll try my best to explain with different examples and everything. But [with a robo-adviser], it is all on you ...for you to read." "Oftentimes, in the fine print, they'll say, 'We share our information with our partners.' But who are they and who all has access to this personal information, this private information?" Estes said. With access to such sensitive financial and personal information -- a field day for potential hackers and scammers -- make sure you do your due diligence and fully understand where your account information might be going, he added. The concern isn't just about robo-adviser companies, but also their corporate parents and business partners. Many automated platforms operate under the umbrella of larger financial institutions, giving multiple divisions access to sensitive financial data for product cross-selling and marketing. There are also unintended consequences when companies change hands, Kayikchyan said. He pointed to the bankruptcy and auction sale of 23andMe following a 2023 data breach that compromised nearly 7 million customers' genetic data and ended with a $30 million lawsuit settlement. In its bankruptcy proceedings, 23andMe's genetic database of more than 15 million users was set for sale to a pharmaceutical company for $256 million, but the deal fell apart after a multistate lawsuit over data privacy concerns. After the auction reopened, a research firm created by one of 23andMe's original co-founders won a $305 million bid for the company and its assets in July. "The database is there, so the company itself didn't do anything wrong," Kayikchyan said. "The information is private, but what if it gets purchased at a later time? This can happen to these robo-advisors as well." "Financial planning is a lot more than investing," Estes said. "Investing is an important part of what I do, but it's kind of a small percentage of the total," he added, noting that insurance, estate planning considerations ,and saving and budgeting for college expenses are all part of his tailored advice to clients. "All of these things are elements that are just not going to be done by robo-advisors." Human financial planners, on the other hand, can spot issues clients didn't know existed. "One of the things that I really feel that my clients benefit from is me going through their statements and finding interesting things, observations," Estes said, adding that he always asks clarifying questions before making recommendations -- something algorithms can't replicate. For example, a human adviser might notice concentrated stock positions from employer equity compensation -- something a robo-adviser wouldn't see if those holdings sit in separate accounts, Estes noted. Life changes such as marriage, divorce, children, job loss, or an inheritance require nimble financial adjustments that algorithms might struggle to accommodate. A human adviser can help clients navigate these transitions while managing the psychological aspects of investment decisions, like resisting the urge to panic-sell during big market downturns. For those just starting their investment journey, robo-advisors offer an accessible on-ramp. But it's important to know they have limitations and when to seek human expertise before an AI-powered decision made in the ether costs you more than the algorithm's modest fees could ever save. But as your investment goals get more ambitious and you have more assets to manage, getting holistic human advice that goes beyond investment picks is worth considering, Estes said. "I view AI solutions, to some extent, if they can do it well, as a compliment and not a threat to my business."

AI vs. Human Advisors: What Americans Really Think About Retirement Planning

Trust remains the dealbreaker as almost two-thirds of Americans tell surveyors that AI can't understand how emotions shape financial decisions. Retirement is keeping Americans up at night. Almost 7 in 10 say , up 8% from 2023, according to Northwestern Mutual's 2025 Planning and Progress Study. Meanwhile, 51% told surveyors they'll outlive their savings. That anxiety is pushing people to seek help, as Americans are increasingly , including robo-advisors and AI-powered planning apps, to get their retirement on track. The anxiety cuts deepest for younger Americans. Among Gen Z and Millennials, about 4 in 10 say they feel depressed or anxious about their finances on at least a weekly basis -- up significantly from 2023. There's evidence that professional help works: three-quarters (76%) of Americans with a financial advisor describe their finances as "strong," compared with just 44% without one. But only about 27% of Americans work with a traditional advisor, as fees and balance requirements put them out of reach for many. That gap is driving experimentation. In a 2024 Ipsos/BMO poll, about 37% of Americans said they were already using AI to help them manage their money, most commonly to , build budgets, or evaluate investment ideas. Yet almost two‑thirds in the same survey said AI is incapable of understanding how emotions impact financial decisions -- exactly the kind of subtlety that matters for decisions around retirement. In other words, people seem willing to let an algorithm run the numbers, but want a human being to double-check a financial plan and have the ability to adjust or override it. Even as AI use expands, most Americans still trust humans over machines, especially when it comes to personal finances. In the Northwestern Mutual survey, respondents were asked who they trusted more when it came to creating a retirement plan. Most (56%) chose human advisors. Just 13% chose AI. However, most respondents said they'd prefer to work with a human advisor who also uses AI. Digital financial tools aren't new -- robo-advisors like Betterment and Wealthfront have been around for over a decade, . What's changed is the emergence of generative AI tools like ChatGPT, which can answer open-ended questions and simulate the back-and-forth of a conversation with a human advisor. But generative AI provides new risks. Unlike a that follows a set algorithm, AI chatbots can misunderstand context or give advice that sounds confident but isn't personalized to your situation. For retirement planning, where the stakes are high and mistakes compound over decades, that's a genuine concern. Perhaps that's why, when it came to trusted sources of financial information, 42% of households turned to their bank or credit union in the prior year. By contrast, only about 3% of households reported using general AI chatbots or robo‑advisor apps. A 2024 J.D. Power survey similarly reported that only 27% of bank customers trust AI for financial information and advice, even as many expect it to make everyday banking more convenient in the coming years. In the end, most people seem to want a mix of both, as surveys show Americans prefer a hybrid model for financial advice -- AI for speed and number-crunching, plus a human advisor for judgment, trust, and personalization.