AI Has a Limited Role in Investing — That Could Change

While younger investors have taken a growing interest in artificial intelligence, advisors are cautioning individuals against using AI. They’ll use a do-it-yourself approach in hopes of gaining an investing edge.

AI can be a great educational tool for investors wanting to learn more about specific sectors or the historical performance of certain investments. However, it’s not sophisticated enough to be a stock-picker or means of developing a diversified investment portfolio for the average retail investor.

AI can be “great for pulling historical data, or coming up with investment or economic conclusions formed with a body of empirical research,” Kenneth Chavis IV, a senior wealth counselor at Versant Capital Management, told VettaFi.

However, he wouldn’t recommend that retail investors rely on AI to pick stocks or structure their portfolios. Those tasks depend “on your goals, tax situation, and (risk) comfort level.”

“It could be helpful from a learning standpoint. I would say it’s part of the education process. It can play a role,” Chavis said.

“I would caution people from excessively using or relying on it for investment decisions or strategy. There’s a possibility that the information you’re getting is over a limited scope, as far as timeframe or market cycles,” he added.