AI Financial Advice Gap: Why Consumers Need More Help

Why It Matters

Without proper oversight, AI‑generated advice can expose retail investors to sub‑optimal or risky decisions, while the emerging targeted‑support regime could reshape the advisory market by creating a regulated middle tier.

Key Takeaways

• 40% of Britons use AI chatbots for personal finance advice
• 1 in 6 turn to AI for investing tips
• 1 in 7 use AI for digital‑asset guidance
• AI suggestions often lack diversification and ignore individual risk profiles
• Regulators propose “targeted support” to bridge AI advice and professional guidance

Pulse Analysis

The rapid uptake of generative AI for retail finance is reshaping how everyday investors seek guidance. Finder’s 2025 study reveals that four in ten Britons have already turned to chat‑based models such as ChatGPT, Microsoft Co‑Pilot or Google Gemini for budgeting, savings or investment ideas. This surge is driven largely by rising living costs that have priced many out of traditional advisory services, creating a demand for low‑cost, instantly accessible alternatives. FinTech firms are therefore racing to embed AI capabilities into their consumer‑facing platforms.

Despite the appeal, AI‑driven advice often falls short of professional standards. Ortec Finance points out that large language models lack the structured intake process that human advisers use to map a client’s risk tolerance, time horizon, assets and liabilities. In a Sky News experiment, the models were asked to allocate £16,000 (about $20,300) and produced recommendations that were poorly diversified and sometimes contradictory. Such gaps expose users to unnecessary market risk and underscore the need for safeguards before AI can replace qualified counsel.

Regulators are responding with a “targeted support” framework that sits between generic information and full‑service advice. Under the proposal, licensed firms could deliver semi‑personalised recommendations to consumer segments sharing similar financial profiles, preserving professional oversight while keeping costs lower than bespoke planning. For the fintech ecosystem, this creates a new compliance frontier and a commercial opportunity to develop compliant, data‑driven advisory tools. Companies that can blend AI efficiency with regulator‑approved personalization are likely to capture a growing slice of the underserved retail market.