Survey finds one-third of Canadians use AI to manage finances. Should they? – National

Younger Canadians, in particular, are turning to artificial intelligence to shape your finances, research released this week shows.

Experts tell Global News that there are many tasks that AI is well equipped to handle financial decision-making, but there are limits to how much Canadians should rely on evolving technology.

The Bank of Montreal commissioned Ipsos to survey Canadians on how they are using AI in their financial planning.

About a third of respondents to the survey said they use AI to help manage their finances, according to the report released Monday.

Most commonly, Canadians are using AI to increase their financial literacy (43%), set household budgets (43%), discover new investment strategies (42%) and grow their savings (40%).

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Gayle Ramsay, head of everyday banking and client growth at BMO, told Global News that many Canadians may not know that AI is already embedded in online banking tools.

She gives the example of an interface that tells a customer whether they’re on track to meet their savings goals or alerts them to a potential cash flow problem in the next seven days, all based on an AI’s reading of their spending habits, regular expenses and deposits.

The survey shows that AI has been used to plan upcoming financial milestones among 55% of Gen Z respondents (Ipsos divides this group into those born between 1997 and 2005).

Ramsay says it’s no surprise to see Gen Z leading the pack when it comes to asking AI questions.

Financial anxiety has been particularly acute for the younger generation, with money issues cited as the top stressor for 91 percent of Gen Z respondents. Fear of unknown expenses, housing costs and keeping up with monthly bills were listed as the top sources of this anxiety.

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“That’s exactly what they’re using it for. They’re asking questions … about finances and they’re leveraging it to help manage their day-to-day lives,” Ramsay says.

What can AI do for your finances?

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Ben Felix, head of research at PWL Capital, says the firm’s portfolio managers have used AI to analyze client profile data and market changes to prepare for client meetings.

“AI can take that information and output something understandable to an advisor, which would otherwise take many, many hours of reading notes,” he told Global News.

Tools like AI work best when they have a large pile of data to sift through, Felix says, particularly when you’re looking for insights into your own spending habits. If someone just wants to know where their money is going on a regular basis, “that’s super helpful” and can’t get the consumer into “too much trouble,” he says.

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Ramsay says she sees AI thriving in what she calls “lookalike modeling,” where a tool can provide options or suggestions that consumers who “look like you” have had success with in the past.

However, both Ramsay and Felix warn that an AI is only as good as the information it has access to.

“It’s not like you’re getting objective, unbiased advice,” Felix says. “It’s going to have some bias built into it just based on how it’s been trained.”

While he believes AI can be useful in assessing whether a financial plan is on track, he would reject families using the emerging technology to craft that strategy entirely.

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“If you’re trying to decide, ‘Should I contribute to my RRSP or my TFSA?’ I would be, at this stage, a little nervous about that coming from an AI,” Felix says.

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Felix also doesn’t see publicly available AI models in their current forms as something he would recommend for stock picking, for example.

Choosing investments, if you want to have an edge, requires having access to information or models that the rest of the markets don’t have, Felix explains. Some hedge funds’ in-house AI models can be trained to help speed up investment decisions, for example.

But much of the data used to train publicly available generative AI applications is dated, for example, and these tools may not have up-to-date information about market dynamics. An application like ChatGPT, for example, may be able to describe the overall composition of a balanced portfolio, but it won’t be able to access new stock tips that aren’t yet available on public markets.

Felix contrasts this with the robo-advisors available at some financial institutions in Canada, which typically have a set of human analysts building portfolios behind a software interface that helps the investor decide which combinations of those assets are right for their risk tolerance.

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BMO’s survey found that 68% of respondents felt AI couldn’t understand how emotions influence financial planning, a claim Felix disputes.

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He says AI can indeed be trained on research and data that tracks emotional responses to money, including how behavior changes in response to market declines. AI could be trained to help advisors themselves anticipate clients’ needs in times of distress, he says.

Ramsay says the nature of financial management is less about numbers and more about a person’s relationship with money.

While an AI can come up with a financial strategy that makes sense on paper, she says Canadians should take plans to a trusted advisor to get a human perspective and ensure the numerical proposal makes sense for the level of risk someone is willing to take.

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“You may know logically that this is what you should do, but emotionally it may be a little different. I think that’s the beauty of talking to a financial planner or a banker in terms of getting that other perspective.”

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