The economic landscape is shifting, and with it, the way we manage our finances. Artificial intelligence (AI) is rapidly emerging as a powerful tool, promising to revolutionise everything from investment strategies to everyday banking. But is it all smooth sailing? Forbes contributor Jamie Catmull joins ABC News Live to unpack the potential benefits and pitfalls of entrusting your money to AI. This isn't just about robots replacing financial advisors; it's about understanding how AI can augment human expertise and reshape the future of finance for Kiwis.

The Rise of the Robo-Advisor: What's the Appeal?

Robo-advisors, powered by AI algorithms, are gaining traction for a reason. They offer several compelling advantages, particularly for those new to investing or with smaller portfolios. Here's a breakdown:

• Lower Fees: AI-driven platforms typically charge significantly lower fees than traditional financial advisors, making investing more accessible.
• 24/7 Availability: Forget waiting for office hours. AI platforms are available around the clock, allowing you to monitor and adjust your investments whenever you need to.
• Data-Driven Decisions: AI algorithms analyse vast amounts of data – market trends, economic indicators, and your personal financial goals – to make informed investment recommendations. This removes emotional biases that can often cloud human judgment.
• Personalised Portfolios: AI can tailor investment portfolios to your specific risk tolerance and financial objectives, ensuring a more aligned approach.

The Potential Downsides: Risks and Considerations

While the potential of AI in finance is undeniable, it's crucial to acknowledge the potential drawbacks. Here's what you need to be aware of:

• Lack of Human Touch: AI can't offer the same level of empathy or understanding as a human advisor, especially when dealing with complex life events like job loss or illness.
• Algorithm Bias: AI algorithms are trained on data, and if that data reflects existing biases, the AI's recommendations may perpetuate those biases, potentially leading to unfair or suboptimal outcomes.
• Market Volatility: AI algorithms can struggle to adapt to sudden, unexpected market events. While they're good at analysing historical data, they can't predict the future.
• Security Concerns: As with any digital platform, AI-powered financial tools are vulnerable to cyberattacks and data breaches.
• Regulatory Landscape: The regulatory framework surrounding AI in finance is still evolving in New Zealand, which can create uncertainty for both investors and providers.

The Future of Finance: A Hybrid Approach

The most likely scenario isn't AI completely replacing human financial advisors, but rather a hybrid approach. AI can handle the routine tasks – data analysis, portfolio rebalancing, and basic customer service – freeing up human advisors to focus on more complex issues and build stronger client relationships. For Kiwis, this could mean access to more sophisticated financial planning at a lower cost, combined with the peace of mind that comes from having a human expert to turn to when needed.

What Does This Mean for You?

Before entrusting your money to AI, do your research. Understand the platform's algorithms, its security measures, and its track record. Consider your own financial needs and comfort level. And remember, AI is a tool – a powerful one, but still just a tool – that should be used wisely and in conjunction with sound financial planning principles. Jamie Catmull's insights offer a valuable perspective on navigating this exciting, and potentially transformative, shift in the financial landscape.