Embracing AI Tools in Personal Finance

AI-driven tools are increasingly becoming an integral part of our daily lives, facilitating a range of tasks from household shopping to meal preparation. Personal finance platforms are no exception. Recent research from Ipsos commissioned by BMO revealed that 37% of Americans utilize AI to support their financial management efforts. Among these users, the most frequent applications include acquiring knowledge about personal finance, creating or updating budgets, and saving money. This trend is particularly important as traditional financial advice often remains inaccessible to many newcomers and those with smaller investment portfolios, given that certified financial planners typically charge high fees or require considerable minimum assets.

“Wealth management has traditionally been viewed as a space with high barriers to entry,” explained Gloria Garcia Cisneros, a certified financial expert at LourdMurray. “For individuals who are just starting or who have basic needs, AI tools and robo-advisors can offer more affordable alternatives and help them initiate their financial journey.”

While AI-powered financial tools indeed reduce the cost of obtaining financial guidance, they also have limitations that can dictate whether they are suitable substitutes for traditional planning. CNBC Select has compiled a review of various AI-driven finance apps, detailing their capabilities and identifying scenarios where consulting a human financial planner is still crucial.

What AI-Powered Tools Offer

Many AI-driven financial tools aim to achieve two main objectives: helping users set and monitor financial goals while analyzing their financial states. From this information, these platforms can provide tailored insights and actionable recommendations, empowering users to make informed financial choices.

To initiate usage, individuals generally connect their checking and savings accounts along with credit cards, allowing the tools to assess transaction histories. The AI systems then analyze spending habits, identify patterns, and observe behavior over time. Consequently, the platforms propose features such as automatic transaction categorization, personalized budgeting tips, spending alerts, and goal-oriented recommendations.

Highlighted AI Financial Tools

Betterment

• Minimum Deposit and Balance: Minimum requirements can vary based on the chosen investment vehicle. While Betterment imposes no minimum on investment account balances, there is a minimum ACH deposit requirement of $10. Premium investing necessitates a $100,000 minimum balance.
• Fees: Fees vary according to the selected investment vehicle and account balances. Click here for details.
• Investment Vehicles: Options include stocks, bonds, ETFs, and cash.
• Educational Resources: Betterment provides materials on retirement and other educational topics. Terms apply, excluding crypto asset portfolios.

Betterment features AI-driven portfolio rebalancing and goal-based planning among its services. For automated investing accounts, there is no minimum balance, but annual fees apply: 0.25% for accounts ranging from $0 to $1 million, 0.15% for accounts between $1 million and $2 million, and 10% for accounts exceeding $2 million.

Monarch

• Cost: $8.33/month (billed annually at $99.99) or $14.99/month ( billed monthly); use code CNBC50 for 50% off your first year.
• Free Trial: A 7-day free trial is available prior to subscription.
• Standout Features: Includes a net worth tracker, investment portfolio analysis, goal creation and progress monitoring, budgeting, and expense tracking.
• Expense Categorization: Yes, with options for users to modify.
• Account Links: Can link to bank accounts, credit cards, IRAs, 401(k)s, mortgages, and loans.
• Availability: Accessible on both the App Store (for iOS) and Google Play (for Android), with a web version available.
• Security Features: Utilizes leading industry security practices, as stated on Monarch’s website.

Monarch’s AI features include a virtual assistant that addresses user queries, offers insights on financial trends, and provides weekly recaps of significant financial changes. Users can access these services for either $14.99 per month or $99 per year.

Cleo

Cleo features a dedicated AI assistant that aids users in daily financial management and offers behavioral coaching by categorizing expenses and sending alerts as users approach their budget limits. The free plan grants access to the AI chatbot, facilitates basic budget setups, tracks and categorizes spending, and offers insights into cash flow. Additionally, premium plans, priced from $2.99 to $14.99 per month, include extra tools such as cash advances, credit score access, and automated saving options with higher interest rates than the free tier.

Fernanda Dobal, Cleo’s product director of AI and chat, noted that many users engage with AI tools to ask questions, often leading to additional information or services being presented. “What distinguishes AI technology is its capacity to proactively reveal insights that could be beneficial rather than simply waiting for user input—we are proactive versus reactive,” Dobal stated.

Why Choose AI Tools?

The global robo-advisor market, which covers platforms that provide automated financial planning with minimal human involvement, was valued at $1.4 trillion in 2024 and is anticipated to reach $3.2 trillion by 2033, as reported by Market Research Intellect. Analysts attribute this growth to affordability and accessibility, which include lower fees, minimal account minimums, and round-the-clock digital access. Additionally, many users appreciate the diminished sense of judgment.

“Numerous individuals have expressed that conversing with an AI feels less intimidating than speaking with a financial expert, especially when they have limited knowledge and believe the AI won’t judge them,” Dobal added.

AI-powered tools do retain a human element; many platforms assert that their technology is supported by human teams that oversee, rectify, and enhance AI-generated responses. “Many of the answers provided here are developed and crafted not just by large language models, but also by certified financial planners, therapists, and accredited financial coaches,” explained Rachel Lawrence, a certified financial planner and head of advice and planning at Monarch. “They review answers diligently, ensuring that our AI tool remains accurate and reliable,” she continued. “We actively intervene when we identify responses that we deem misleading.”

Limitations of AI Tools

While these AI-driven platforms offer substantial benefits, they may lack the ability to provide specialized advice on investing, tax strategies, or legal and financial matters. Additionally, it’s important to consider data privacy concerns and the phenomenon known as AI hallucination, where systems may generate inaccurate or misleading recommendations. Users are urged to review an app’s privacy policy meticulously and understand its data usage practices before accepting any terms.

Certified financial planners, such as Cisneros, emphasize that AI works best in conjunction with human expertise. “The optimal solution combines AI with human insight, allowing technology to enhance our capacity to deliver personalized advice,” she stated. “This approach enables us to focus more on being present for our clients, addressing the human aspect of financial planning.”

Conclusion

As AI tools continue to evolve, they offer exciting new possibilities for personal finance management. While they provide affordable and accessible solutions, it’s essential for users to remain aware of their limitations and the added value that human financial planners can provide. By combining both AI and human expertise, individuals can navigate their financial journeys more effectively and confidently.

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