Nick Holeman, director of financial planning at Betterment, says he would be cautious about using AI for personalized financial advice right now. “We’re seeing a lot of traction with general financial education. In that case, it’s a brilliant tool.
It’s really powerful. It can be really incredible. But using it for personalized financial advice, I don’t think it’s quite there yet,” Holeman said in a recent episode of Decoding Retirement.
Betterment helped pioneer robo-advising and define the direct-to-consumer automated investing model that many firms later adopted. However, Holeman said, “We don’t use AI for our financial advice currently. We’re looking into it.
We’ve seen a lot of promise, but it can act a little bit odd when you start to get into some really technical details.”
AI “hallucinations” — confidently stated inaccuracies — are improving, but they remain a concern.
Caution advised for AI in advice
“Large language models weren’t really built to do math,” Holeman said.
“We’re seeing that get a little bit better as well, but there’s still a little bit of concern there. So it’s moving incredibly fast. I think we’re not far away from it, but we’re just not seeing that widespread adoption quite yet.”
Holeman acknowledged that AI can be helpful for users who understand financial terms and prompt design.
In other words, it can be empowering if you know the right questions to ask. “Prompt engineering is important, and it’s worth exploring because many investors don’t even know what to ask,” he said. Once you’re dealing with terms like adjusted gross income or anything involving the IRS, it can get pretty complex.
But he added that even savvy AI users and financial advisers would be wise to proceed with caution, especially given the potential tax changes on the horizon and the rapidly evolving political environment.
In recent months, Holeman noted that Betterment advisers have witnessed increased client conversations about political uncertainty affecting investment decisions. “We are seeing an uptick in investors being nervous,” Holeman said. Our investors have been very well behaved with their retirement portfolios, but we are seeing them hold on to cash for a lot longer than usual.
No matter how you proceed — with or without AI — Holeman encouraged people to “think like an engineer” when approaching financial decisions.
Instead of defaulting to vague answers like “it depends,” he urged people to identify clear inputs, calculations, and expected outcomes — an approach he said helps demystify and improve the consistency of financial advice.
