Around 50% of Gen Zers and a little over half of millennials have used ChatGPT, OpenAI's viral AI chatbot, for investing advice, according to a recent survey of over 2,000 Americans by The Motley Fool, a financial and investing advice company.
That's despite the fact that OpenAI prompts ChatGPT users with a warning that it sometimes "writes plausible-sounding but incorrect or nonsensical answers" and that the tool is not intended to give advice.
But letting AI build your portfolio probably isn't the best investment strategy anyway.
"It is by no means going to provide you with a way to beat the market," Douglas Boneparth, a certified financial planner and the president and founder of Bone Fide Wealth, tells CNBC Make It.
Boneparth himself put ChatGPT's financial acumen to the test and says the results weren't great. He asked the tool to build him a hypothetical diversified portfolio with 80% equity and 20% fixed income and gave it a few parameters, risk characteristics and guidance as to what kind of exchange-traded funds (ETFs) he wanted to use.
"I was presented with a table that added up to more than 100%," he says. After informing ChatGPT of this, it tried to correct the error but didn't necessarily pull the right information, he says. However, Boneparth says he was impressed by how close ChatGPT came to achieving what he asked.
People who use AI tools like ChatGPT for financial advice may misunderstand the current capabilities and limitations of these tools. Since they're able to process large amounts of data, some may assume that AI chatbots are "all knowing" or can predict the future performance of a company, Boneparth says.
While this technology may make a few lucky stock picks, it hasn't been around long enough for us to see whether it can replicate those results over the long term, he says. Additionally, the free version of ChatGPT has limited knowledge of world events after 2021, which means its responses aren't based on real-time data.
"There's just fundamental components of the technology that are not there to do the things that you hope it would do," Boneparth says. "There's a difference between potential and reality. And the reality is we're certainly not in a place where we should be relying on a ChatGPT bot or AI in general to be making investment decisions for ourselves."
How ChatGPT can actually help investors
While ChatGPT and other AI chatbots may not be the best tools for building a portfolio, they can be useful to investors in other ways.
The technology can be a helpful tool when looking up definitions of financial terms you may be unfamiliar with or for gathering data when researching a company that you're considering investing in, Boneparth says.
But don't expect AI to fully replace human financial advisors any time soon.
While we'll probably continue to see these tools do very well when it comes to "analytical number crunching," a human financial advisor is better suited to help you with financial decisions that involve feelings and behaviors, such as deciding to move across the country or choosing where to retire, Boneparth says.
"AI isn't really capable of understanding the specific preferences of an individual, and therefore you're not necessarily going to get tailored financial advice," he says.
"Anytime feelings and behaviors get involved, the financial planner or financial professional is likely going to be able to use their own ability to relate or commiserate and help process those feelings a lot better than what AI can do at this point."
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