ChatGPT for financial advice? Investors turn to alternative sources

A new survey from the Nationwide Retirement Institute reveals consumers are bracing for impact. A whopping 68% expect a recession within the next six months. Add to that, about 62% of respondents believe a recession will be as severe or worse than the Great Recession. Consumers’ sentiment on the economy and their own financial strategy has fallen considerably since 2022.

“It’s not surprising that people are feeling anxious,” said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute. “It’s important for advisors and financial professionals to understand the emotions their clients are feeling right now.”

When it comes to managing personal finances, consumers are most concerned about inflation or rising living costs (59%), the cost of rent or housing (34%), lack of savings for unexpected expenses (32%), and managing debt (31%).

In an attempt to offset inflation, some consumers are making decisions that could be detrimental to their long-term financial strategy–

• 37% have or are considering relying more on credit cards
• 24% have or are considering reducing their retirement plan contributions
• 21% have or are considering taking out a new loan
• 57% have used savings in the past 12 months to pay for everyday expenses (Gen Z and millennial consumers measure in at 64% and 66%)

Investors are turning to alternative sources for financial advice. Seven in 10 respondents are not using a financial advisor. Notably, about one-third of respondents feel ChatGPT will provide better financial advice than a human advisor in the next five years. This percentage is higher for younger consumers, at 37% for Gen Z and 43% for millennials.

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“In moments like we’re experiencing today, advisors and financial professionals have a huge opportunity to build deeper, trusting relationships with clients,” Rodriguez said.

Rodriguez offers tips for advisors to relieve their clients’ financial anxiety–

1. Reach out to clients with an understanding of their worries and fears
2. Determine the factors that are influencing their mindset
3. Work together to decide the most appropriate path forward for their goals
4. Ask if their financial goals/circumstances have changed
5. Reinforce the benefit of a financial plan and the importance of sticking with it

“There can be a real temptation for consumers to retreat or even surrender when the financial news cycle seems challenging. The first step for advisors is understanding where their clients are coming from by listening with empathy. That can set the stage for a more collaborative conversation about steps to keep them on track.”