Don’t Hand Your Retirement Income Planning Over to AI Just Yet

I created the Go2Income planning method to help people generate more spendable income in retirement and at the same time make the retirement income planning process more efficient for both retirees and advisers.

Now ChatGPT and other artificial intelligence programs have been introduced that, some influencers say, will replace advisers with AI solutions that produce even better results, and at even lower cost.

You might say it’s being set up as a Battle of the Titans: ChatGPT vs. Go2Income.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

What Do Some Experts Think About Our Chances of Winning?

ThinkAdvisor, the online financial newsletter, interviewed Gary Smith, an economics professor and author who has spent time on this issue. As he says, “Really smart people … think that the moment is here when computers are smarter than humans. But they’re not.” He pointed out that AI algorithms are really good at finding statistical patterns, but correlation is not causation.

Joe Rotunda, director of the Enforcement Division at the Texas State Securities Board, said in another ThinkAdvisor interview that some firms are trying to entice clients by advertising that they use AI in calculations. “We have a brand-new threat to the investing public — promoters who are trying to capitalize on the hype of artificial intelligence,” Rotunda said. “It’s an absolute trap.”

What Does ChatGPT ‘Think’?

I’m willing to let ChatGPT add its perspective. Here is the answer I got when I typed the question, “Can chatbots take over retirement income planning?”

Retirement income planning involves a complex analysis of multiple factors, including projected income streams, expenses, taxes, investment returns, inflation, and other variables. While chatbots can be programmed to provide information and guidance on these topics, they may not have the expertise and judgment required to develop a comprehensive retirement income plan tailored to an individual's unique circumstances and goals.

Additionally, retirement income planning often involves sensitive and personal information, such as financial statements, account balances, and tax returns. It's important to ensure that any chatbot or digital tool used in retirement income planning is secure and can protect the privacy of this information.

Overall, while chatbots can be a helpful tool in retirement income planning, it's likely that human advisors and financial planners will continue to play an important role in this process for the foreseeable future.

I almost couldn’t have said it better myself. However, I believe we’ll do more than “play an important role” in both creating the planning algorithms and in advising clients.

Best Retirement Income Plan Involves Human and Machine

Your retirement income plan has to begin with you. That’s because you need to educate yourself on what’s important in terms of starting income, inflation, tax considerations and level of market volatility you are willing to take. Then you need a planning specialist to analyze and understand the additional planning options that are necessary to create an even better plan to meet your criteria.

And finally, in both cases, there has to be an algorithm (that’s no longer a dirty word) that takes your personal choices, the available product options, market assumptions, tax rules, etc., and builds a plan that presents the elements of a plan you’re interested in:

• Lifetime income.
• Legacy to family.
• Liquidity for non-recurring expenses, like medical or caregiving.

It doesn’t stop there. You need a financial adviser to dig a little deeper and help you make the best choices to implement your plans.

Here’s the challenge I will put to any of the chatbots: Our planning algorithm has (approximately) 55 zillion plan combinations. Assuming you can assemble the 55 zillion most efficiently (you can’t), can you find the right one for your client that meets their objectives and is readily implementable?

The answer: It takes a combination of AI and a beating heart to successfully accomplish that task.

What About the Future?

Chatbots are good at gathering information and inferring how the data might lead to a conclusion. They are not yet so good at predicting what’s not on paper or on the screen or, in other words, telling us what’s next.

We get questions from real people, questions that are nuanced and personal. That’s the process that got me into the business of finding financial solutions — and helped me determine what’s missing and therefore what’s next.

Let me give you one example. Sitting right there in broad daylight is $5 trillion in home market value that could help mass affluent Baby Boomers retire better. How to unlock that value without creating additional risks and huge costs is what we will be adding to Go2Income after more testing.

That’s something no chatbot could imagine. At least, not until a human invents it.

To take advantage of the power of artificial intelligence, combined with human expertise, visit Go2Income and begin the process yourself toward finding the best retirement income plan for you.