“No, swipe left. We can do better.” Photo: Getty Images
Young Australians are increasingly using artificial intelligence platforms like ChatGPT to get financial advice, putting their savings at risk and prompting a warning from investment watchdogs.
New data from the Australian Securities and Investments Commission shows young people are bypassing financial experts and blindly following “biased” and “dangerous” positive AI recommendations into high-risk investments such as crypto trading.
ASIC Commissioner Alan Kirkland said AI tools are good at presenting general information, but they also systematically hide downsides.
“AI is often poor at giving a balanced view of the risks associated with a particular course of action, so AI could be able to more clearly explain the benefits of taking a particular step without actually discussing the risks that should be considered before making a particular decision,” Kirkland told The Australian.
He said this widespread positive reinforcement from AI could mask the inherent unreliability of the platform’s output and mislead consumers.
“It may sound very sophisticated and authoritative, but it’s really not.”
ASIC’s Moneysmart platform found that 80% of Gen Z (born between 1995 and 2012) use AI for financial information. Compounding the risk is that 64% of Gen Z trust AI platforms for financial advice, with 16% saying they “completely trust” guidance.
This mass belief in untested and risk-averse digital advice comes despite ASIC data showing 92 per cent of the Gen Z cohort are concerned about their financial future, as many Australians struggle with severe cost of living pressures.
“In a climate where the cost of living is tough, it’s really important that people make financial decisions that are in their best interest, especially when it comes to investments,” Kirkland said.
“When people are investing money, it’s often money they can’t afford to lose. That’s why we strongly recommend not relying on AI as your sole or primary source of information when making decisions to invest your money.”
ASIC also reported that high-risk investments are on the rise, with 23% of Gen Z now holding crypto assets, up from just 9% in 2023.
Additionally, approximately 66% of Gen Z crypto holders take a short-term or speculative approach to these assets, and 29% base their trades on social media and influencers.
But the survey, based on more than 1,000 respondents, found that young people are worried about their finances, with paying bills and being able to earn and save enough money being the most common concerns.
When asked if now is a good time to invest in cryptocurrencies, ChatGPT said it’s a “solid move” but “not a quick win.” We then compared Bitcoin to other cryptocurrencies such as Ethereum, Solana, and Chainlink, and outlined an “evidenced way” to start investing. He also said ETFs are “boring but powerful.”
Kirkland said that because AI models draw on vast unfiltered data sets, they can easily provide distorted information or answers if bias exists in the underlying source data.
Importantly, he said, consumers and investors have no way of determining the soundness of advice.
“AI presents information and recommendations that appear to be very reasonable, but it is very difficult to determine whether that is actually the best information for you.
“The challenge for consumers and investors is that they don’t know what the bias is.”
Additionally, the generality of global AI tools means they are “not necessarily robust to Australia-specific problems”. This deficiency may result in advice being provided that is irrelevant or inconsistent with local regulatory requirements and tax laws.
Kirkland said that while AI is useful for common tasks such as summarizing complex documents or helping people “understand new concepts on a very general level,” it falls flat when it comes to the financial needs of specific individuals.
He said consumers should seek independent verification of important financial decisions, such as ASIC’s “revamped” Moneysmart tool.
“If you’re going to use AI, understand its limitations,” Kirkland says. “Using a variety of sources of information, especially trusted and independent sources alongside AI, is critical.”
This article first appeared in The Australian as watchdog warns of ‘dangerous’ positive AI advice amid surge in crypto trading.
