How much can you trust AI with your money?

Artificial Intelligence (AI) is becoming part of everyday life. Whether it's planning a holiday, organising a busy schedule or writing an email, AI can help make everyday tasks a little easier.

And it's not just helping with daily to-do lists. More people are using AI to understand and manage their money. According to research by STRAT7, 55% of UK adults use AI for financial questions. Among Gen Z and Millennials, that figure rises to around 80%.

But while AI can make managing money feel simpler, how reliable is the information it provides?

Research from the Financial Conduct Authority (FCA) found that 44% of less experienced investors aged 18 to 40 wrongly believed AI-generated financial information was regulated. In reality, general-purpose AI chatbots aren't regulated financial advisers.

And there are questions about how reliable their answers really are. PensionBee's AI Pensions Stress Test found that while 89% of answers were broadly accurate, 11% were potentially harmful. Some left out important information or failed to recognise when someone might need extra support.

That doesn't mean AI tools can't help you manage your money. But there's an important difference between using it to understand your options and relying on it to make financial decisions.

So, what can AI help with, where does it fall short and when should you look elsewhere?

What PensionBee research reveals

PensionBee's AI Pensions Stress Test tested four popular AI chatbots across nine pension topics. These included tax relief, pension withdrawals, scams and major life events.

The research looked at 539 AI-generated answers and found that:

• 89% were broadly accurate or better;
• 11% were potentially harmful, meaning they could lead to financial loss or decisions that can’t be undone; and
• 33 of the 57 potentially harmful answers were still rated broadly accurate or better.

This highlights an important risk. An AI-generated answer doesn't have to be wrong to cause harm. For example, a chatbot might correctly explain how to withdraw money from a pension but fail to mention the tax implications. Or it might suggest an option without explaining the risks or how someone's personal circumstances could affect the outcome.

This matters because pension decisions can have long-term financial consequences. Without the full picture, someone could end up paying more tax than expected, losing valuable pension benefits or making a decision that's difficult to reverse.

What could AI be useful for?

While AI isn't a substitute for financial advice, it can still be a useful starting point for understanding your money. From explaining pension jargon to making sense of financial documents, there are plenty of ways it could make everyday tasks easier.

When it comes to money and pensions, AI could help you:

• explain basic financial terms in plain English;
• summarise documents into key points to check; or
• organise financial paperwork and checklists.

The key is knowing what to ask. AI can help you understand how something works, but that doesn't mean it can tell you whether it's right for you.

For example, asking an AI tool "What is pension drawdown?" is different from asking "Should I use pension drawdown?". The first asks for general information, while the second depends on your personal circumstances and may require regulated financial advice.

When AI misses the bigger picture

One of AI's biggest limitations is that it may give an answer without knowing enough about the person asking.

Your age, income, pension type and retirement plans could all affect the answer to a financial question. There may also be pension guarantees or benefits that a chatbot doesn't know about.

The same PensionBee research found that questions about major life events had a 17% potential harm rate, compared with 3% for questions about paying into pensions and tax relief.

The research also found cases where chatbots left out key rules. For example, one answer about combining pensions failed to mention that transferring certain defined benefit pensions worth more than £30,000 requires regulated financial advice.

These gaps can be difficult to spot if you're unfamiliar with pensions. That's why it's worth checking what might be missing, rather than taking an answer at face value.

The risks AI might overlook

A money question isn't always just about money. Someone asking how to access their pension early might be dealing with debt, unemployment or other financial pressures.

PensionBee's research found that AI was three times more likely to give potentially harmful answers when asked about money problems.

This shows why understanding someone's circumstances matters. A chatbot might explain how to access pension savings without recognising financial difficulties or pointing towards more suitable support. And acting on an incomplete answer could leave someone worse off.

There are also risks around scams. If someone unexpectedly offers to help you access your pension early or promises unusually high investment returns, it's important to check whether the offer is genuine. The FCA's ScamSmart service can help you recognise the warning signs of a potential scam.

Getting more from AI

The way you ask AI a question can make a difference to the answer you receive. While there's no guarantee it'll get everything right, a few simple steps could help you get clearer, more useful information.

• Don't mistake confidence for authority - a clear, confident answer can still be incomplete or wrong.
• Give AI the right context - tell it you're in the UK and include relevant details about your circumstances, such as your age, pension type or whether you're going through a major life event.
• Avoid sharing sensitive personal details - assume anything you type is potentially visible to others. Keep passwords, account numbers etc. to yourself. 
• Ask neutral questions - AI can be influenced by the way you phrase a question. Rather than asking "Should I withdraw my pension?", ask it to explain the options, risks and potential consequences.
• Check the sources - look for trusted sources such as MoneyHelper, GOV.UK and HMRC, and don't rely on AI's answer alone.
• Double-check before acting - always verify important information, particularly about tax, deadlines, withdrawals or large sums of money. If you're unsure, speak to your pension provider, MoneyHelper or Citizens Advice.

It's also important to check any information before acting on it. The FCA warns that AI can provide outdated information or even invent facts. You can check pension rules and guidance through trusted sources such as GOV.UK or HMRC.

Knowing when to seek help

Some money decisions need more than a quick answer from AI. And while a chatbot might suggest speaking to an adviser, it won't always point you towards the right support.

There are several places you can turn to for help, including:

• your pension provider’s website or customer service team who can explain your pension's charges, features and benefits;
• MoneyHelper which offers free, impartial guidance on money and pensions;
• Pension Wise which offers free guidance on pension options for eligible people aged 50 or over; and
• an Independent Financial Adviser (IFA) who can look at your circumstances and recommend suitable options.

Unlike regulated financial advice, information from general-purpose AI chatbots doesn't come with the same consumer protections. This means that if you make a financial decision based on an AI-generated answer, you generally won't be able to turn to the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if something goes wrong. 

Using AI with care

AI can be a helpful starting point for understanding your money, but even an answer that sounds right might leave out important details.

When it comes to pensions, missing information about tax, benefits or personal circumstances could affect the decisions people make, sometimes with long-term financial consequences.

As AI becomes a more familiar part of managing money, understanding both its benefits and limitations could help people make more informed financial decisions.

Want to know more? Read our full AI Pensions Stress Test report to explore what we found when we put four popular AI models to the test.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This article is for information only and doesn't constitute financial advice.