Guidelines to Steer Your Interaction
By Cassie Carstens
1/11/2025
At a recent Ninety One conference, much attention was given to the astronomical progress of artificial intelligence (AI).
Several talks were presented, along with real examples demonstrating the staggering capabilities these applications already possess. The advancements are exciting, but one must question what these tools might mean for investors’ and advisers’ decision-making.
At university 20 years ago, we were given a marketing textbook that taught you how to get a product into a client’s shopping basket.
Conceptually, nothing has changed, except that we now have hyper-personalised background data on our spending, preferences, and search history to make the “sell” easier.
For years we thought this tactic was limited to selling toothpaste, a car, a T-shirt, or a soft drink to unsuspecting consumers. The reality is that financial companies have also read the AI playbook and unleashed it in the form of person-specific, targeted advertising across different channels.
A market commentator recently wrote that someone investing without any real knowledge (that is, after 10 minutes of questions to ChatGPT and three financial-influencer videos) is a bit like someone running through a dynamite factory with a lit torch. You might make it to the other side, but you remain a fool.
You think of the story of Pandora’s box and how reckless it can be when AI tools are used blindly in financial and investment planning.
If we assess society’s general interaction with social media, the outcome is disappointing. Without a near-Damascus moment in how we deal with AI technology, it could become straightforwardly dangerous for any investment decision.
Do not ask AI these questions
I asked ChatGPT what the most dangerous investment questions are that you could ask it. The answers were excellent. Broadly, there are three categories of questions you should avoid when dealing with technology and investments.
- Questions seeking personal financial advice
These include: Should I sell my house and buy shares? Should I put everything into Naspers now? How much of my portfolio should be invested in offshore equities?
The reality is that your needs, your tolerance for volatility, your goals, and your financial circumstances are unique. Your financial and investment plan cannot be generic.
- Questions about the future
These include: What will interest rates be next year? Will the stock market keep rising? Which share will perform best this year?
The truth is that nobody (AI included) can predict the future — pandemics, political announcements, and wars included.
Rather focus on preparing for the range of things that could happen.
- Generic questions seeking personalised answers
These include: What is the best investment? What is the best fund? Which investment carries no risk with the highest return? How can I pay less tax?
We drastically underestimate how important personalised financial advice has become in a world that tries to convince us there is a one-size-fits-all solution.
Ask AI these questions instead
A more constructive interaction with AI tools involves questions like:
- What mistakes did investors make before and after market crashes such as the dot-com bubble or the Covid-19 pandemic, and what can I learn from them for the next market shock?
- What taxes apply when wealth is transferred from one generation to the next? (And then seek professional help.)
- What are the capital gains implications when a business owner dies and held shares in their personal name?
- How can I become a more patient investor?
- What are the most important money principles I can teach my children?
- What investment biases exist, and which ones am I guilty of?
Read Morgan Housel’s book Same as Ever. Broadly, the book explores how much has changed in the world of technology and investing, but what has not changed is how people behave when things are going very well or very badly.
Basic human nature causes us to react quite predictably in times of danger, excitement, greed, and hope. The damage in the investment world emerges when you react poorly to these emotions — and no AI tool will save you from that.
If you once again want to sell your shares after the market has fallen 20% and run to cash, a financial planner or trusted confidant is far better positioned to talk you back from the proverbial investment cliff.
As a keen action-movie viewer (before the era of sleepless nights with babies in the house), I cannot help but think of the character Magneto in X-Men. It is all good and well to play with AI applications, listen to podcasts, and read about cryptocurrencies — but always wear your proverbial alloy helmet and assess carefully which information is valuable and which is simply noise.
Everyone casually drops a Warren Buffett quote these days, but you should reflect on why he said the following at this year’s 60th annual Berkshire Hathaway Shareholders Meeting: “The world is not going to adapt to your investment approach; you’re going to have to adapt to the world.”
His message was that investors must adjust their expectations, their interactions, and their tolerance for volatility to what the markets serve up — not the other way around.
We cannot move blindly and naively through life when it comes to financial and investment planning. A good adviser’s work is to bring context and peace of mind.
In any case, it is a hundred times more valuable to teach your grandchildren the family milk-tart recipe or how to catch a fish than to worry about finances every day.
Embrace the changes AI may bring. Humanity has overcome major transitions before and emerged stronger — provided we handle them with care.
Cassie Carstens is a Certified Financial Planner at Woodland Wealth. Contact him at info@woodlandwealth.co.za.
Although all possible care has been taken in the preparation of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone who intends to take any financial action based on this document is strongly advised to first consult with his/her personal financial advisor. Woodland Wealth is an authorized financial service provider with FSP no. 5966.