Can Microsoft’s AI perform just as well as our financial adviser?
Microsoft’s AI chatbot Copilot faces off against a human financial adviser in a test of its ability to deliver reliable money advice.
Artificial intelligence is diagnosing diseases, detecting fraud in real time and can beat chess grandmasters.
But can it deliver financial advice comparable to that of a human adviser who has had years of training and regulatory qualifications but charges on average a $4600 annual fee?
We decided to put it to the test.
On The Australian’s The Money Puzzle podcast, Microsoft’s Copilot was asked a series of financial questions, everything from how to get started as a novice investor to difficult queries such as the level of superannuation contribution caps.
Of course, to know if the bot was any good, we needed an expert. Facing off against it was The Australian columnist James Gerrard, a financial adviser of more than two decades.
How good was the AI bot as a replacement for a financial adviser? Microsoft Copilot is remarkably easy to use and broadly correct in its thematic approach to investing.
In fact, it’s at its best on questions where there is an unambiguous answer. For example: When can you take money out of super?
On this query the bot, with a female American accent, says: “Generally, accessing super before retirement isn’t allowed unless under specific conditions like severe financial hardship or certain medical situations. Once you hit the preservation age, you can typically access it.”
And if you ask a follow-up question, it is equally impressive.
When we followed up with: What’s the preservation age?
It gave the perfect reply: “Your preservation age is the minimum age you can generally access your super in Australia. It ranges from 55 to 60, depending on when you were born.” So far, so good. But sometimes the answers or suggestions from the US-based service are more than a little off-target.
When we asked what we should read to get going on the road to investment success, it presented a strong bias towards the US. What’s more, the two books mentioned were hardly ideal for the beginner.
The bot’s first recommendation was Benjamin Graham’s The Intelligent Investor (from 1949), which may be described best as the Don Quixote of investment literature (a very highly regarded tome where very few readers can get to the end).
An alternative suggestion, Burton Malkiel’s A Random Walk Down Wall Street (from 1973), hardly fitted the bill either.
More pointedly, Gerrard was understandably indignant over how the bot got it wrong when it gave an out-of-date answer for the current level of superannuation contribution caps.
The bot said $27,500, which was right two years ago but wrong today, when it has been lifted to $30,000.
As Gerrard observes, if an investor took the bot’s answer seriously, it would have meant they missed a tax break.
But, then again, the bot bounced back with an impressive answer on the government’s highly controversial new super tax.
It suggests: “Super income is generally taxed lower than regular income, but not always tax free. From July, 2025 super balances over $3m will face higher tax rates on the earnings.”
The answer of course is technically correct, but a human adviser might have mentioned the law has yet to pass parliament.
In fact, the government is likely to delay the measure and make changes, potentially ensuring it is indexed.
As Gerrard put it: “AI is fine as far as it goes, but you have to know the right questions to ask.”
Perhaps it’s best to let the bot have the last words:
“Relying solely on AI for financial advice carries risks. There’s the potential for over-reliance on algorithms that might not capture the nuances of individual circumstances or market anomalies.
“Plus, without human judgment, there’s a risk of missing the emotional or psychological aspects of investing.”
Yes, indeed. No investor could argue with that.
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