.jpg)
Imagine a world where Baby Boomers and Gen Z could use the same tools to solve their generationally unique financial challenges. A world where a 23 year old new grad with no money gets the same high quality professional guidance as a 65 year old retiree with 40 years of savings. A world where Gen Xers and Millennials get their questions answered and everyone receives tailored solutions to their money problems. This feels utopic, mostly because existing solutions are cost prohibitive and largely inaccessible to anyone with a low to median amount of assets, but it is attainable through advances in artificial intelligence for personal finance.
Financial services have traditionally been reserved for the affluent older generations. Financial planning is only lucrative if you’re working with folks who already have a robust balance sheet. This leaves millions of people, old and young, wondering how they should manage the money they do have. This is more than just investment questions as well. Younger generations make many extremely important decisions in their 20s through their 40s. Purchasing homes, establishing careers, paying off student loans, raising families – your biggest monetary decisions are likely happening in these early adulthood decades.
The millions who can’t afford a great financial planner often turn to apps and online forums to get the answers they need regarding their finances. Younger generations are either digital natives or fluent in technology and are comfortable trying out new methods if they think it’ll have a net positive impact on their situation. Unfortunately, the results have been mixed thus far as the information they are absorbing varies widely in quality.
Older generations tend to want answers from credentialed humans who they can sit with in person or speak with on the phone. They are becoming more comfortable with technology, as we’ll discuss later, but a highly experienced planner again comes at a considerable cost and they do have limits to their capacity. I know this personally as I once managed more than 75 high net worth households. This level of service caused me to burnout after just a few years.
Back during my time as a young advisor, what I learned was that each generation has common issues but within those ubiquitous generational challenges are unique circumstances requiring customized solutions. This is the case for the young and the old, the rich and the poor, and everyone in between. There is not a soul on this earth that couldn’t benefit from a financial plan.
I also discovered the way people of all ages learn and talk about money differs. Our money scripts, traumas, and beliefs lead to various challenges regarding our relationship with money. Yet, they all need that high level of service to achieve their unique goals. Someone in their 20s with a mountain of student loan debt has far different planning needs than someone in their 70s looking to leave a legacy to grandchildren. Ideally, the 20 year old is the grandchild of the wealthy 70-something, but we aren’t all blessed with a deep-pocketed grandparent!
The emerging solution for all generations is to embrace technology that can replace or complement a good financial planner and advisor, offer personalized solutions, and act in a fiduciary manner all for a fraction of the cost.
Everyone has a financial planning need and everyone deserves a high quality plan. This is why we believe all generations should embrace AI in personal finance. The advances in technology in money management can have incredible positive impacts on anyone’s finances regardless of their situation. From decreased chances of being defrauded, increased wealth building opportunities, and enhanced financial literacy, there are a plethora of reasons for folks of all ages to implement AI for personal finance into their lives.
In a rapidly evolving financial landscape, artificial intelligence (AI) has emerged as a powerful tool capable of addressing the unique financial challenges faced by each generation. From Baby Boomers down to Gen Z, the adoption of AI in personal finance promises a transformative impact that will enhance financial literacy and democratize access to financial advice. AI is not exclusive to the tech-savvy young generations, but a universal resource for all.
Let’s take a look at the existing generations and their current financial challenges. Money issues evolve with each generation, and understanding the distinct problems faced by each is crucial to appreciating the need for AI in personal finance.
Baby Boomers grapple with issues such as determining the right time for retirement, safeguarding against scams, ensuring their retirement savings last, and comprehending how much they can spend during their retirement years (Fortune, 2023). The potential of outliving one's money is a significant concern, necessitating sophisticated financial planning. Baby Boomers also aren’t necessarily afraid or overwhelmed by new technology. The Boomer who can’t even “open a PDF'' is actually a fairly inaccurate representation of their technological capabilities. One study showed 70% of Baby Boomers are curious about new technologies and the same percentage said they aren’t intimidated by new technology (Razorfish, 2023).
Generation X faces the challenge of saving enough for retirement, financing their children's college education, caring for aging parents, and coping with the high cost of living. As the bridge between Baby Boomers and Millennials, Gen Xers shoulder diverse financial responsibilities (AARP, 2023). As the “sandwich generation”, Gen X came of age before the digital revolution of the early 2000s, so they really are the connectors between the pre-Internet and post-Internet worlds. As the younger siblings of Boomers, they are even more comfortable with technology. More than seventy-five percent of Gen Xers are on social media (Gitnux, 2023).
Millennials confront unique challenges such as achieving homeownership, managing childcare costs, addressing the high cost of living, and balancing the need to save and invest for the future while repaying student loans (Business Insider, 2023). Millennials are the last generation who remembers life before the digital age. They were adolescents and teens as the Internet became mainstream, so while they are not digital natives per se, they are quite comfortable using technology and adopting new advances.
The youngest generation, Gen Z, born after 1997, enters the workforce burdened with student loans, with limited or no savings and investments, and navigating the complexities of early career and life decisions (CNBC, 2024). Gen Z is the first generation considered digital natives. They weren’t around for life before cell phones and the Internet. They are completely comfortable adopting new technology, and in fact are often looking for ways to disconnect from it (Huler, 2024)
AI has the potential to revolutionize personal finance across generations, offering a range of benefits transcending age demographics. The following outlines the tangible and potential advantages of embracing AI in personal finance:
AI can provide real-time monitoring and detection of fraudulent activities, offering a layer of security for individuals of all ages. Baby Boomers, in particular, can benefit from AI's ability to identify and prevent scams that specifically target their demographic (The Aging, 2023). Although, younger generations are also falling victim to scams at similar rates as well. Generative AI assists in fraud detection by identifying “suspicious financial transaction patterns.” Furthermore, “by processing vast data volumes, these algorithms can recognize normal transaction behavior and flag anomalies,” according to an essay on theaging.ai.
For retirees and near retirees, AI can optimize retirement planning by considering various factors such as life expectancy, healthcare costs, and market fluctuations. This ensures that individuals won't outlive their money, addressing a common concern for Baby Boomers and Gen Xers alike (Kiplinger, 2023). For the younger generations, retirement planning isn’t necessarily at the forefront, but its importance shouldn’t be discounted. AI can ensure those further from retirement are staying on track and increasing their amount saved and invested over time by automating their finances, making and implementing recommendations based on income, spending, goals, and necessary saving rates.
AI can provide customized solutions for the specific financial challenges faced by the four generations. Whether it's helping Millennials save for a down payment on a house or guiding Gen Xers through the intricacies of funding their children's education, AI can adapt to diverse needs (Pymnts, 2023). While there are common themes with the financial obstacles each generation faces, the solutions should be extremely personalized. AI can create a plan based on the user’s actual life circumstances and real-time financial data more efficiently and effectively as a human financial planner. The accuracy of the recommendations is based on if the AI has enough of the user’s data to make an informed plan. While this seems scary to some, this is no different than the requirements of a human financial planner.
AI can act as a continuous educator, offering insights into financial planning, investment strategies, and money management. The AI will provide “just in time” learning that is relevant to the person’s current situation and further help them make decisions that are in their best interest. The education users receive again will be personalized to their situation and available at all times. How the user receives their financial information can also be tailored - audio, visual, or written lessons are all possible with generative AI. This is far more effective and scalable than traditional financial education.
One of the significant advantages of AI in personal finance is its cost-effectiveness. It can replace or complement traditional financial advisors at a fraction of the cost, making financial guidance accessible to a broader audience. This will go a long way in the efforts to close the wealth gap and open up the financial services industry to all. If a person still prefers to work with a human advisor, AI can enhance the experience if the advisor is willing to adapt the technology as well (Carson Group, 2024).
It is becoming increasingly well documented that contrary to the misconception that AI is exclusively for the young and tech-savvy, there is a growing trend of AI adoption across all generations. Fortune (2023) highlights Baby Boomers catching up with AI faster than expected, embracing it as a tool to navigate their unique financial challenges. Business Insider (2023) emphasizes the benefits that both Boomers and Gen Z can derive from AI, debunking the notion that AI is reserved for the younger, more tech-oriented demographic.
The increasing comfort level with AI advice, as reported by Investopedia (2023), indicates a broader acceptance of AI across different age groups. Carson Group (2023) stresses the positive evolution of AI in financial advisory services, demonstrating its ability to cater to the diverse needs of clients spanning multiple generations.
In conclusion, the adoption of AI for personal finance is not a trend among specific generations or demographics, but a universal need. The financial challenges faced by humans of all ages are unique, but the overarching themes of securing a comfortable retirement, managing costs, and making informed financial decisions are shared across age groups. AI offers a versatile and inclusive solution, capable of addressing each person’s concerns, questions, and doubts regarding their financial situation.
The benefits of AI in personal finance extend beyond mere convenience and cost effectiveness. AI safeguards against scams, ensures adequate retirement planning, and provides tailored solutions for all. Its role as an educator and low-cost alternative to traditional financial advisors makes it accessible to individuals of all financial backgrounds.
As we look to the future, it is evident that AI is not a tool reserved for the young or the technologically inclined. Rather, it is a transformative force with the potential to democratize financial empowerment for every generation. By embracing AI for personal finance, individuals can enhance their financial literacy, gain control over their financial destinies, and navigate the complexities of an ever-evolving financial landscape. The universality of AI in personal finance is not just an incredible achievement, but a key step toward creating a more financially equitable and informed society.
