As AI tools become increasingly popular among retail investors, experts caution that while the technology can assist with data analysis, it remains unreliable for making crucial financial decisions due to biases, outdated information, and lack of personal context.
Artificial intelligence is rapidly becoming a first stop for retail investors who want quick guidance on where to put their money, but the appeal comes with obvious risks. Shubhodeep Pal, chief product officer at aviation strategy firm SimpliFlying, has used AI to build investment tools for his own portfolio, yet his conclusion is cautious: the technology can help organise data and test ideas, but it still needs human approval before any trade is made. His approach reflects a broader truth now being tested by ordinary investors using general-purpose chatbots such as ChatGPT, Claude and Gemini as if they were financial planners. According to recent analysis cited by the Free Press Journal, the tools can sound authoritative even when they are wrong, and their output can change depending on how a question is framed.
That warning matters because the pool of retail investors is large and still growing. The Free Press Journal reported that India had more than 22.9 crore demat accounts as of May 2026, with a median investor age of 32, making AI’s reach potentially vast among younger, digitally fluent users. Research from MIT and Stanford, also cited in the report, suggests AI advice can line up closely with expert views in some cases, but the same work found that results varied sharply with wording and perceived gender, including more cautious recommendations for women in comparable prompts. That kind of inconsistency underlines a central problem: a chatbot may appear consistent, but its answers can be shaped by hidden biases and prompt design.
Specialists in wealth technology say AI is most useful when it supports research rather than replaces judgement. Rohit Prakash, founder of SEBI-registered platform Genvest, told the Free Press Journal that generic tools cannot deliver meaningful advice without understanding income, savings, age, risk appetite and market conditions, whereas regulated systems can use those inputs to suggest allocation, fund selection and rebalancing. Kiplinger likewise reported that many Americans now use AI for budgeting and investing, but warned that such tools lack the emotional intelligence and life context needed for major financial decisions. SmartAsset reached a similar conclusion, saying AI can strengthen disciplined investing and lower costs, yet remains vulnerable to poor data, bias and weak transparency.
The biggest concern is not that AI is useless, but that it is persuasive. Akhil Theerthala, a data scientist and independent researcher, told the Free Press Journal that small changes in prompts can produce different recommendations, while fabricated citations and limited visibility into training data make verification difficult. Kanan Bahl, a chartered accountant and financial educator, argued that investment advice is inherently personal and that no chatbot can replace the long-term hand-holding a human adviser provides. Kiplinger and TechRadar have both warned that AI can be outdated, overconfident or simply unsuitable for high-stakes decisions, especially where regulations and safety guardrails lag behind the technology. For investors, the lesson is simple: use AI to think, not to decide.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
