Four in five less experienced investors have used AI for help with investing – and around two-thirds of investors overall report turning to AI for investment help occasionally or regularly, according to a new FCA study.
The regulator's research, published today, revealed that 56% of 18 to 40-year-olds who own or are considering investments trust AI tools.
That’s more than those who trust TV and radio (47%), press (46%) or social media influencers (29%).
The study found that people are getting more comfortable with AI, with two-thirds expecting to lean on the technology even more over the next year.
It's findings echo a study published earlier this week that found more than half (55%) of 18 to 29-year-olds say they trust AI completely or partly and use it, with nearly a quarter (24%) saying they would feel comfortable discussing financial worries with AI.
But the new research also revealed that investors may be misunderstanding the level of protection they can rely on AI to support their investing decisions:
• Almost half (44%) mistakenly believe AI-generated financial information is regulated.
• More than one in three (38%) believe it’s fine to make an investment decision based solely on the outputs of AI.
• Around a third (32%) wrongly think they'd get compensation from the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service (FOS) if AI advice went wrong.
General purpose AI chatbots and tools are not regulated by the FCA. The tools can respond to a variety of prompts and topics but aren’t set up to help consumers with financial advice, research, or decision making.
Tools which are specifically set up to provide financial advice would be likely to fall within the FCA’s remit.
The good news thrown up by the research was that almost three quarters (73%) know that AI can provide inaccurate information. And 86% understood the need to check the sources referenced when using AI.
Lucy Castledine, director of consumer investments at the FCA, said: “AI can help you research companies, understand jargon or explore options before you make a decision. But you need to understand how you’re protected and continue to use your own judgement."
She said the regulator's InvestSmart website can help investors make more informed decisions.
Rob Hillock, head of personal Financial Planning at Broadstone, said: “AI is rapidly becoming the first port of call for a new generation of retail investors, but confidence is clearly running ahead of understanding. The rapid growth of low-cost trading apps has put stock-picking and crypto investment within easy reach, while AI can appear to offer free, instant guidance on which investments will be the next winners creating a potentially dangerous combination."
He warned that AI cannot replace regulated financial advice or personal judgement. "Crucially, it cannot necessarily replicate the personalised assessment needed to determine whether an investment is suitable for an individual’s objectives, time horizon, appetite for risk and capacity for loss. Investors must verify AI’s outputs, understand the risks and be clear about what protection they have before putting their money on the line.”
• The research was conducted by the FCA via the platform Attest using a quantitative usage & attitudes (U&A) study. The survey was conducted on 24 July to understand consumer adoption, trust, comfort, and future expectations regarding the use of AI tools for personal investment research and financial decision-making in the UK market. The sample comprised 666 respondents based in the UK, open to all adults across the 18 to 40 age range. All participants either currently own investments or would consider buying investments in the next 12 months.