The Hidden Dangers of Using AI for DIY Financial Advice

Artificial intelligence (AI) is transforming how we live, work, and make decisions. In the world of personal finance, it’s now easier than ever to type a question into an AI chatbot and get an instant answer that sounds smart, confident, and even personalised. But when it comes to financial advice, especially in the Australian regulatory environment, using AI for “DIY advice” can be risky — and sometimes downright dangerous.

1. AI Isn’t a Licensed Financial Adviser

In Australia, anyone providing personal financial advice must hold an Australian Financial Services Licence (AFSL) or be an authorised representative of one. AI tools — whether it’s a chatbot, a language model, or a budgeting app — don’t have a licence, nor are they bound by the same fiduciary duties and professional standards as human advisers.

That means when AI suggests an investment strategy, superannuation choice, or insurance option, it’s doing so without understanding your personal circumstances — such as your income, goals, risk tolerance, and family situation. Acting on this information could lead to financial decisions that breach regulations and harm your long-term financial wellbeing.

2. Generic Information ≠ Personalised Advice

AI can summarise complex financial topics and explain concepts clearly — but it can’t truly tailor advice to you. The difference between general information and personal advice is crucial.

• General information helps you understand financial concepts.

• Personal advice considers your unique situation and recommends what you should do.

Most AI tools blur this line. They might use persuasive or personalised language (“you should invest in ETFs” or “you could save $X by refinancing”), which makes the advice feel bespoke — but it’s not. Acting on this kind of guidance can lead to costly mistakes that a licensed adviser would have caught.

3. AI Doesn’t Understand Context or Emotion

Money decisions aren’t just about numbers. They’re about emotions, values, and life goals — things AI can’t fully grasp. It doesn’t know that you’re about to start a family, that you’re anxious about market volatility, or that your main goal is to retire early to spend time travelling.

A professional adviser helps you balance these human factors with technical financial planning. AI, by contrast, can only make assumptions based on limited text — and those assumptions can easily be wrong.

4. Errors and Biases Are Common

AI systems learn from data — and data can be incomplete, outdated, or biased. There have already been examples of AI “hallucinating” financial information, such as inventing interest rates or misquoting tax rules.

When you rely on that kind of faulty data for your financial decisions, the consequences can be serious: paying unnecessary tax, missing out on entitlements, or taking on inappropriate risk.

5. No Accountability When Things Go Wrong

If an adviser gives you poor advice, you have recourse: they’re regulated, insured, and subject to professional accountability. If an AI gives you poor advice, there’s no recourse. No compensation, no professional indemnity, no human to take responsibility.

AI platforms often include disclaimers stating that the information is “for educational purposes only” — meaning you’re on your own if you act on it.

A Better Approach: Combine Technology With Professional Advice

AI can be a great starting point — a way to learn, explore scenarios, or prepare questions for your adviser. But it should never replace professional financial planning. The best outcomes happen when technology supports, rather than substitutes for, expert human judgment.

A qualified financial planner can interpret your goals, apply licensed expertise, and use AI tools responsibly to enhance (not replace) decision-making.

So by all means, use AI to get curious about your money — but when it comes to making real financial moves, talk to a human who’s legally and ethically bound to put your best interests first.