Artificial intelligence is showing up everywhere, including the world of personal finance. But how good is it at answering real questions from real people?
The Guardian tested ChatGPT, the free version of OpenAI’s chatbot, by asking it common financial questions. Then they brought in human experts to evaluate the answers.
Retirement Savings
The first question was whether a 35-year-old earning £35,000 with a £20,000 workplace pension is saving enough to retire at 60.
ChatGPT estimated a comfortable retirement would require up to £793,000 in savings.
Steve Webb, partner at LCP, said that number was “over the odds,” explaining that “you will need £635,000 on current calculations.”
He also pointed out that ChatGPT was wrong about the state pension age, which will be 68, not 67.
Still, he said the tool did a decent job starting the conversation: “It is good the AI explains that in the first years of retirement, you are relying solely on your private pension pot.”
Mortgages
Then they asked whether a borrower should choose a two- or five-year fixed mortgage deal. ChatGPT laid out current interest rates and mentioned arrangement fees.
It also explained the risks of letting a mortgage roll over to a higher standard variable rate (SVR), which are typically much higher, about 7% to 8%.
An SVR can rise if interest rates go up, and lenders aren’t required to pass on rate cuts.
ChatGPT added that if you expect future rate cuts, a two-year deal might let you refinance sooner at potentially lower rates, though you’ll need to remortgage more often.
Five-year deals are slightly higher but offer longer-term stability and protect against rising rates. If steady repayments are a priority, it said a five-year fix is usually recommended.
David Hollingworth of L&C Mortgages said the response was “a bit of a mishmash,” mixing outdated rate examples with general advice.
He criticized it for missing options like three-year or 10-year fixes, and added, “It does provide a quick spin around some of the things that have been going on in the market.”
University Costs
The Guardian asked how a parent with two children could save for university.
ChatGPT explained the basics of tuition and maintenance loans and suggested Junior ISAs, premium bonds, and index funds.
Charlene Young from AJ Bell said, “It did a decent job of spelling out the facts of how much uni could cost.”
But she noted it skipped key risks, like the short timeline before the eldest child enrolls.
She also said, “A pot such as a Junior Isa makes sense…but that money is locked away until the child turns 18.”
Insurance Needs
Then it was asked what kinds of insurance someone should consider if they are expecting a child and buying their first home.
ChatGPT listed life, income protection, critical illness, buildings, contents, and travel insurance.
Graeme Trudgill of the British Insurance Brokers’ Association called the response “very generic.”
Kathryn Knowles of Cura Insurance said ChatGPT “did not properly distinguish” between income protection and critical illness cover.
Garry Nelson from AllClear Travel Insurance added that ChatGPT’s answer on travel coverage was “very simplistic.”
Can You Really Trust AI With Your Money?
ChatGPT can provide general summaries and basic information.
But it sometimes gets facts wrong and doesn’t offer the depth you need to make big financial decisions.
It might be a helpful starting point, but as The Guardian concluded, “if you want advice, you should be better off with a human.”
Tips for Using AI for Money Advice
- Provide detailed info like your age, salary, and debts for better answers.
- Double-check all facts and figures.
- Use AI to understand concepts, not make decisions.
- Protect your data: review privacy settings.
- Don’t expect current product recommendations. Use AI as a research tool, not a replacement for expert advice.
In short, AI can point you in the right direction, but you’ll still need human judgment to get to the finish line.