AI for the everyday investor: is it a smart move?

Artificial intelligence is no longer confined to Silicon Valley or the trading floors of Wall Street. Everyday Australians are experimenting with AI to guide their investment choices, from summarising ASX announcements to scanning company reports and even providing portfolio suggestions.

A new Chartered Accountants ANZ survey found that almost half (48%) of retail investors with more than $10,000 in equities have used tools such as ChatGPT or Microsoft Copilot for investment research. Among younger investors the figure jumps to more than three quarters (78%), suggesting Gen Z and millennials are leading the charge in testing AI’s potential.

But enthusiasm is not universal. The same survey revealed that more than four in ten investors avoid AI altogether, citing concerns over reliability and a preference for traditional sources of financial advice.

What investors are using AI for

Unlike licensed financial advice, which remains heavily regulated, investors are mostly using AI for general tasks that save time. These include:

• Research: summarising company announcements or financial statements.
• Scenario analysis: scanning global news to assess risks or opportunities.
• Comparison tools: weighing up company financials, market sentiment or fund holdings.

Some are also turning to robo-advisors, which use automated portfolios and rebalancing to simplify investing. While not as conversational as chatbots, these services rely on algorithmic decision-making that shares many traits with AI.

The global trend

Australian adoption mirrors global findings. Research from the Ontario Securities Commission and behavioural insights experts recently mapped three main use-cases of AI for retail investors: decision support, automation, and scams or fraud. Investors lean on AI for analytics and automation, but regulators warn of the darker side – that scammers are just as quick to harness these new tools.

Other studies confirm the demographic split. A World Economic Forum and Experian survey found younger generations were far more open to using AI in financial decision-making than older cohorts. For them, the technology feels less like a leap of faith and more like an extension of the digital services they already rely on.

Why the shift is happening

Part of AI’s appeal is cost. Traditional financial advice in Australia can be expensive, with the median fee approaching $4,000 per year, according to the Vanguard / Adviser Ratings 2024 report. 

At the same time, adviser numbers have shrunk. WealthData’s figures show the number of advisers in Australia has diminished significantly (-45%) in the past seven years. 15,417 registered advisers remain in Australia, down from around 28,000 at the beginning of 2019.

That has left a widening “advice gap” where many Australians can’t access professional guidance, making free or low-cost AI tools attractive.

Yet cost isn’t the only barrier. Convenience matters too. Investors can ask a chatbot to explain complex ratios in plain language or analyse dozens of reports in seconds. For time-poor households, that accessibility is hard to ignore.

Risks and limitations

It’s sensible to avoid over-reliance. AI models can produce errors or “hallucinations”, confidently presenting incorrect data. They may also reflect hidden biases in their training data. The risk is that investors act on information that looks authoritative but isn’t.

There are also regulatory concerns. In Australia, personalised financial advice requires a licence. If AI outputs stray beyond general information into tailored recommendations, investors could mistakenly rely on advice that falls outside regulatory protections.

Privacy and data security present another challenge. Feeding sensitive financial data into third-party AI tools raises questions about where that information is stored and how it could be used.

The future of advice

Analysts and studies suggest the future lies in hybrid models, where AI supports human advisers rather than replacing them. Experimental research shows people are more comfortable when a human professional validates AI-generated insights, particularly for high-stakes or complex financial decisions.

That points to opportunities for fintechs and advisers willing to embrace technology. Digital platforms that make AI safer and more transparent, while keeping a human in the loop, could bridge the gap between accessibility and trust.

A cautious revolution

For now, it seems AI is less a revolution in investing than a cautious experiment. Younger Australians are driving uptake, mainly utilising the technology as a research assistant rather than a trusted adviser. The gap between enthusiasm and trust remains wide.

As regulators catch up and tools mature, Aussie investors will have to decide whether AI becomes just another research aid or a genuine partner in their financial journey.