Should you trust financial advice from AI?

It's official: the robots have found a place in your wallet. Canadians aren't just using artificial intelligence to plan vacations or find recipes — they're using it for money matters.

"It's mostly driven by convenience and curiosity," said Robb Engen, a fee-only advisor who founded the Boomer & Echo personal finance blog and who writes for The Juice. "People love getting quick, free answers without having to book an appointment or feel judged. For years, Google searches and online calculators have been the go-to tools for DIY investors. AI feels like an evolution of that." 

Today, some Canadians are turning to AI for help with managing their finances. But before you start gabbing with a chatbot, it's worth asking, "How much should you really trust financial advice from AI?'

What AI chatbots can actually do well

Generally speaking, AI chatbots are skilled at breaking down the financial basics—from simple definitions to side-by-side comparisons of different financial products to saving and debt repayment strategies. Like a wise friend, they're always ready to give their two cents on money matters.

"If you ask how a TFSA works, how compound interest grows, or the pros and cons of paying off debt versus investing, you'll generally get a decent answer," said Engen. "It's like an always-available encyclopedia for money topics."

When The Globe and Mail tested ChatGPT on common financial questions, it scored solid marks for accuracy and clarity. But there was a big gap. It skipped over the nuances that make financial advice deeply personal.

"You can ask 'How do I start investing?' and get a solid answer about index funds, diversification, and staying the course," said Engen. "The key is treating it like the first chapter of a guidebook, not the whole plan. Once you start applying that information to your own situation—your income, goals, and behaviour—that's when human advice can make a big difference."

"It's a great starting point," said Engen. "I wish more people used AI to get over the intimidation factor of personal finance." 

Where AI falls short

For all its power, AI still can't understand you as an individual. It doesn't know your unique money habits and the fears, impulses, and emotions shaping your spending and saving. The answers you get may be factually accurate, but too generic to be useful in real life.

"AI doesn't flag emotional or behavioural pitfalls," said Engen. "For example, it might tell you to 'stay invested for the long term,' but that doesn't help when you're watching your portfolio drop 20 percent and wondering if you should sell everything. The blind spot is in understanding people, not numbers." 

In testing by The Globe and Mail, ChatGPT often gave technically correct answers — such as explaining the difference between renting and buying — but missed key context. For instance, it glossed over home maintenance costs, tax implications and how lifestyle choices may affect affordability. 

MoneySense reported similar results: while AI can help Canadians build budgets or savings plans, experts warned about getting "incorrect or half-baked information" if the prompts aren't specific enough.

"AI can't handle nuance," said Engen. "It rarely considers taxes, government benefit claw-backs, or the sequence of decisions that make or break a retirement plan." 

An American bias

Because most chatbots are trained on U.S. data, their advice often tilts south of the border. A 2025 study found that large language models (LLMs) showed heavy U.S. and tech bias in simulated portfolios, allocating about 93% of investments to U.S. stocks versus 59% in a global benchmark—which can increase your risk.

"That's where the human element matters most," said Engen. "Real financial planning is about trade-offs: spending versus saving, security versus growth, work versus leisure. AI doesn't know your fears, your history with money, or what keeps you up at night. It can't tell the difference between someone who's comfortable taking risks and someone who's losing sleep over their RRSP balance." 

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Even worse, chatbots are prone to hallucinations — meaning they may fabricate numbers, misstate facts, or cite outdated information with total confidence. The technology analyzes how humans write, not what's true.

Detailed in a New York Times article, one investor lost money after ChatGPT cited financial figures that were days out of date. Another user received bizarre advice from her chatbot — including selling photos of her feet (!) to pay off debt — a reminder that the machine doesn't always know when it's delulu.

And there are real-life consequences: In a Credit Karma survey, more than half of users who acted on AI-generated financial advice said they later made a poor financial decision or a mistake trying to follow that guidance.

That's the real risk: AI doesn't know when it's wrong, and many people don't know when to question it. 

How to use AI chatbots safely

AI chatbots can be great financial sidekicks—if you know their limits. Here are some tips on how to use them responsibly without putting your money or data at risk:

Use prompts that teach, not tell

Use AI for definitions, comparisons or quick summaries, not personalized advice. Ask "What's the difference between a TFSA and RRSP?" instead of "Which should I use?" 

"If the advice involves a big decision—investing, insurance, taxes or retirement—run it by a qualified planner before you act on it," said Engen.

Double-check before you act

Don't be fooled by the friendly tone or tidy listicle. Chatbot hallucinations (when AI churns out incorrect information) can totally derail your finances. Check any financial plan or advice with a reputable Canadian source before taking the leap.

"Treat the answer like you would a Wikipedia article: good enough to point you in the right direction, but you might be missing important details, subtleties and nuance," said Engen. "Always check the date and context because financial rules, tax limits and product details change all the time. Use multiple sources to verify what you read." 

Protect your privacy

Never share personal details like your SIN, bank statements, account info or income. Canada doesn't yet have clear legislation protecting AI users, and how your data is stored or used is often unclear. Don't type it into a chatbot if you wouldn't email it to a stranger.

Beware of bias

Most AI tools are trained on U.S. data, so advice about taxes, benefits or regulations may not apply in Canada. Verify details with trusted sources (like the Canada Revenue Agency, your advisor, accountant, and bank).

The same goes for investing: because AI tends to lean heavily toward U.S. tech stocks, use it for general research or ideas, not to build your entire portfolio from scratch.

Keep learning, but get human help

AI is a great financial helper, but it's no replacement for a credentialed professional. Use what you learn to have smarter, more in-depth conversations with your human advisor.

When should you seek human advice instead?

Engen recommends talking to a human pro "anytime emotions, taxes or multiple goals collide."

"When you're retiring, selling a property or deciding how to draw down investments, you need judgment and experience," said Engen. "AI doesn't know what it's like to help someone navigate a market crash or balance competing family priorities."

Here's when to call in a human:

1. Retirement planning

A certified financial advisor can help you build a retirement plan that considers government benefits, withdrawals and the lifestyle you want in your golden years.

2. Major life changes or conflicting goals

Marriage, divorce, starting a family, buying a home or inheriting money—these moments have financial and emotional layers no chatbot can fully grasp. A human advisor can help balance competing goals and keep you from making impulsive moves.

3. Creating a tax strategy

Most AI models rely on U.S. data, so their advice often doesn't fit the Canadian context. A human professional can tailor strategies for deductions, credits, or RRSP or TFSA contributions—and help you dodge costly mistakes.

4. Business or self-employment decisions

From setting up a corporation to handling payroll and HST, small business finances involve complex matters that often change. Human accountants, lawyers and advisors know the nuances (and can save you headaches later).

5. Insurance and protection planning

AI can describe the difference between term and whole life insurance. It can't evaluate how much coverage your family needs or whether disability insurance makes sense for your situation. A reputable professional can.

6. When emotions take over

Fear, pride, guilt, excitement—these feelings can drive our behaviour, but AI can't read the room. If you're losing sleep over your RRSP or panicking in a downturn, talk to a real person who can listen and help you stay on track.

"Good planners spend most of their time listening, not talking," said Engen. "That's something AI just isn't built for."

Are we headed toward a robot takeover?

AI is transforming how Canadians learn about and manage money—and that's not necessarily a bad thing. Tools like ChatGPT can translate financial jargon, simplify investing concepts, and run "what-if" scenarios in seconds. But even the smartest chatbot can't understand your full story or the reasoning behind every choice. Think of AI as a financial helper, but don't mistake it for a money guru.