How AI Can Make You a Smarter (and More Confident) Investor

Nowadays, folks are using AI for just about everything: developing fitness plans, generating recipes, creating grocery lists or chore lists, completing school or work assignments, learning new skills, and much, much more.

But what about using AI to help you with your finances?

I DO NOT recommend it for stock picking or important investment decisions.

I’ve found its research is often outdated or just plain wrong.

However, it can help you become a better investor by allowing you to become your own fiduciary.

Let me explain…

The word “fiduciary” sounds fancy and complicated, but it’s simply a person or company that is legally required to act in their client’s best financial interest.

Not all financial advisors are fiduciaries. It’s an important distinction.

A certified financial planner is a fiduciary.

Most brokers are not.

That doesn’t mean that your broker isn’t looking out for you. There are plenty of excellent brokers out there who do the best they can for their clients. I know many of them.

But legally, a broker only has to recommend appropriate investments, not necessarily what’s in your best interest.

Here’s the difference…

If you tell your broker that safety is more important than growth, then they should primarily recommend conservative investments.

Perhaps they recommend a bond fund.

That’s appropriate.

However, that bond fund may come with a steep fee and/or commission for your broker and their company − and they have not broken any rules, as they recommended a suitable investment.

A fiduciary would likely find a similar fund with much lower costs, because legally, they must act in your best interest. Paying a big fee on your mutual fund is not in your best interest.

Oxford Club Chief Investment Strategist Alexander Green often says, “No one cares more about your money than you.” That is absolutely true.

So even if you are working with a financial professional, you need to act as your own fiduciary and ensure that the moves you’re making are in your own best interest.

Here are three steps you can take to become your own fiduciary (and AI can be a huge help).

1. Ask for simple explanations.

We’re often intimidated by people who know more than we do, whether it’s a doctor, an electrician, or a financial advisor. They’re supposed to know more than we do in their fields. They are professionals − and if you hired them, you are probably not.

No one wants to look stupid, but when it comes to your money, you need to understand exactly what’s happening.

You can be self-deprecating, add a little humor, and say, “Explain this to me like I’m a fifth grader.”

I do that with AI all the time.

When I’m reviewing a document − especially a legal one or perhaps a complex financial transaction − I’ll feed it into AI and give it that exact prompt.

Doing this with AI actually makes me more comfortable asking professionals the same thing.

What I’ve discovered is that most people are happy to do so. You are their client, so they want you to understand what they’re doing and why. It makes their service and skills more valuable to you if you know what they’re talking about.

2. Get it in writing.

Whether you’re working with a financial advisor on a simple asset allocation plan for your retirement or considering more complex investments like an annuity or private company, get everything in writing. That way there are no misunderstandings.

Once you have a document, bring it to a trusted accountant or lawyer to review it.

You can also run it through AI and ask for an explanation in simple language. Ask questions about anything you don’t understand or anything that doesn’t sound right to you.

Remember, AI is not 100% accurate. It makes mistakes.

But on simple tasks like document reviews, it does a pretty good job.

3. Keep track.

My father-in-law used to write down the value of his stocks every day on a legal pad.

That may be a little excessive.

But you shouldn’t ignore your statements, which folks tend to do when things aren’t going their way.

Again, use AI to help you go through ordinarily dry documents full of “legalese.” If you receive an update from one of your investments that will be a slog to read, let AI do it for you and summarize it quickly.

You could upload statements to quickly determine your rate of return, how much money you’re paying in fees, or most any other data.

By staying on top of your investments, you’ll have a better understanding of what you have and how much income it produces, and you’ll be less likely to fall victim to fraud.