The risks of letting AI manage your money
Artificial intelligence (AI) is rapidly becoming part of everyday life. Tools like ChatGPT are so widely used that some people are even turning to them as alternatives to therapy sessions or financial coaching. But as this new way of managing our lives becomes more common, have we truly considered the risks of replacing traditional, person-centred services with AI chatbots?
In Australia, almost half of adults (48%) say they are interested in using AI to help with financial decisions, and 28% already have, according to research by CPA Australia. On the surface, the appeal is practical: AI can automate tasks, analyse data quickly, spot spending patterns, and send reminders to pay bills.
But there’s a deeper, more human reason people are turning to AI for money advice—and it’s one that makes the risks even more concerning. Financial stress is isolating. It comes with shame, anxiety, and the fear of being judged. When you’re struggling, the idea of confiding in a friend, family member, or even a professional can feel overwhelming. AI offers something that feels like relief: a non-judgmental listener that’s available at 3am, doesn’t sigh when you make the same mistake twice, and won’t remember your embarrassment next week.
That emotional safety can feel like a lifeline. But it’s also where the danger lies. AI lacks humanity. It can’t understand the stress of living pay-to-pay, the fear of mounting debt, or the weight of family responsibilities that shape how you use money. A chatbot doesn’t understand context the way a human does—it can’t read between the lines when someone is vulnerable, desperate, or on the edge of a harmful decision.
It might confidently suggest payday loans without recognising the debt spiral that could follow, or recommend ignoring creditors when negotiation would be better. Algorithms can analyse your transactions, but they won’t grasp the bigger picture of your life: health challenges, personal values, or the pride of achieving a savings goal. AI treats every query as a data problem to solve, not a person in crisis who needs care, not just an answer.
The voice AI provides isn’t a substitute for human judgment—it’s a simulation of it. And when people are already feeling alone and uncertain, that distinction can blur in ways that leave them more at risk, not less.
Paul Jordan, a Financial Counsellor at Uniting WA, compares AI to “a personal assistant on the first day of their new job.” It needs detailed instructions (prompts), and if those instructions are wrong or incomplete, AI won’t know. It will still give you an answer.
Here’s the catch: most people use AI to learn about topics they don’t fully understand. That makes it hard to know whether the response is accurate. AI won’t tell you it’s unsure or ask for more information, it will simply generate a conclusion, which could be right or wrong. So how do you know when to trust it? And who has the time to carefully craft perfect prompts every time to make sure AI gets it right?
There are other risks too – AI tools can be biased, shaped by the data they’re trained on. If the training data reflects historical inequalities, stereotypes, or gaps in representation, AI can unintentionally reinforce those biases. Privacy is another major concern, sharing sensitive financial information with third-party platforms always carries risk. And while automation is convenient, relying too heavily on AI can leave people exposed.
Paul Jordan shares his concerns: “Many AI tools collect and store sensitive financial data, often without strong encryption or clear data ownership policies. If people aren’t careful, they could be vulnerable to scams, identity theft, or privacy breaches. And because the information you give an AI system is stored indefinitely, the risk might not be immediate – it could surface years later, when you’ve forgotten what you shared or which platform you used.”
This is where financial counselling plays a vital role. Unlike AI, financial counsellors provide a person-centred approach. They don’t just crunch numbers – they listen, empathise, and work with you to understand your situation, what outcomes you’d like to achieve and the best options to get there. They can recognise the impact of stress, trauma, or cultural background on financial decisions that tailor support in ways no algorithm can. Over the years they develop strong relationships with creditors, insurers and other support services, which in turn can generate a much greater outcome for individuals – something AI could never replicate.
Most importantly, human advice is grounded in trust. You know who you’re talking to, how they’ve reached their recommendations, and that their only interest is your financial wellbeing. For many, that human connection is what makes difficult conversations about money feel possible in the first place.
AI will continue to shape the future of finance, but when it comes to navigating the complexities of your own life, there’s no substitute for a real conversation. Financial counselling offers the empathy, context, and support that technology simply can’t recreate – helping people not just manage their money but build confidence and wellbeing along the way.
Paul Jordan offers a hopeful insight: despite the rise of AI, he hasn’t seen a shift in clients turning to it as a replacement for financial counselling. In fact, he’s busier now than he’s been in the past six years. “That tells me the public aren’t relying on AI when they’re in a difficult financial position,” he shares.
Paul Jordan, Financial Counsellor with Uniting WA.
If you’re feeling stuck, unsure, or need guidance on your next steps, reach out to our financial counselling service. Our counsellors offer free, independent, confidential, and non-judgemental support to help you navigate financial challenges and regain control.
