Using AI for financial planning can lead to costly mistakes, according to experts. A chatbot advised someone to move to Monaco to reduce taxes, a technically correct but impractical suggestion for someone working in Croydon. The incident highlights concerns about relying on artificial intelligence for personal finance decisions, especially when users fail to provide crucial details like risk tolerance or investment timeline.

Recent UK data shows 28 million adults used AI for financial guidance in 2025, with 36% of 18-34 year olds relying on it for investment choices. However, specialists warn AI tools frequently miscalculate contribution limits and overlook tapering rules for high earners. These errors can trigger unexpected tax charges, as one accountant discovered when AI platforms assumed unused allowances could be carried forward without using current year limits first.

Unlike regulated financial advisers, AI tools have no fiduciary duty and offer limited recourse when advice proves inaccurate. Users should cross-check responses across multiple models and treat AI as an educational tool rather than an authority. The Financial Conduct Authority emphasizes that consumers must research and verify information independently before making financial decisions, particularly when personal data is involved.