By Lizzie Potter, Consultant at LCP
AI has already come further than you might realise
If you have ever used online banking apps you may have noticed the personalised insights AI is already offering, such as automatically categorising expenses like groceries, utilities or even dining out. By tracking and recognising patterns in individual spending over time, these apps can send alerts to users about overspending in certain categories, upcoming bills or low balances, and some can even predict and warn users if they are likely to exceed budget limits.
Taking it a step further, AI-driven financial assistant apps such as Emma and Trim use predictive analytics to offer tailored suggestions for spending adjustments, negotiating bills and even recommending subscription cancellations (it better not come for my Netflix!) This aims to help users achieve savings goals. Apps like Acorns have also introduced ‘micro-investing’: rounding up purchases and investing the spare change into portfolios tailored to the user’s risk tolerance.
Although currently only available in the US, platforms like Wealthfront and Betterment are leading the next generation of AI-driven robo-advisors. These programmes create customised portfolios targeting financial goals, adapting investments and advice in response to life events or market conditions. Alongside tax-loss harvesting and automated rebalancing, they even allow for scenario analysis to forecast how the user’s financial strategy might play out.
It's not all serious stuff either – Cleo uses encouragement, humour and playful (sometimes sassy!) quips to make its AI chatbot more engaging and make financial management less intimidating. SaverLife, on the other hand, gamifies budgeting. It rewards positive behaviour, like completing savings challenges, with points - much like Duolingo just sadly without the homicidal owl...
What can employers and providers do?
Leveraging AI-based financial tools can empower people to make more informed decisions, increasing financial awareness, literacy and confidence. Yet many of these useful features remain behind a paywall (the irony) that not everyone can afford. As with subscriptions to mental health wellbeing apps, maybe a next step in employee financial wellbeing is for employers to offer an AI-powered financial app subscription as part of their benefits package. Perhaps even pension providers could include something similar for scheme members as a new and enticing part of their offering.
Ultimately, the evolution of this technology means more people in the future will be using AI-powered tools for financial advice and money management, including retirement planning. These tools bring an opportunity to empower members in navigating their pensions and investments; however, as AI’s potential grows, so do the risks. Emerging threats like deepfake technology, data privacy issues and susceptibility to cyber-attacks can facilitate scams and fraud. Inaccurate forecasting or advice can cost the user and undermine financial security.
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