As artificial intelligence (AI) increasingly becomes the first port of call for investors seeking financial advice, experts are cautioning against mistaking algorithmic analysis for personalised financial planning.
While AI can scrutinise a portfolio in seconds, it cannot account for the family circumstances, financial goals and life events that underpin investment decisions, Col. (Retd.) Sanjeev Govila, CEO of Hum Fauji Initiatives, a financial planning firm, says, urging investors not to rely solely on AI-generated advice.
"Your portfolio may pass every AI test and still fail your family," Govila, a Certified Financial Planner, adds, pointing out that while AI is an invaluable learning tool, it cannot replace the judgement that comes from understanding an individual's life circumstances.
Govila's warning centres on a growing tendency among investors to upload their portfolios to AI tools and treat the responses as definitive financial advice.
"The uncomfortable question is this: Is AI judging your portfolio or only judging the small piece of information you gave it?" Govila writes in an HFI newsletter addressed to armed forces personnel, veterans and their families.
According to Govila, AI should certainly be embraced—but with realistic expectations.
"I say this clearly: please use AI. Use it to learn concepts, understand financial terms, compare broad ideas and prepare better questions. But please do not make the mistake of treating every AI-generated answer as complete financial advice."
His argument is not against AI but against using it without context.
To illustrate the point, Govila draws a parallel with healthcare.
A patient, after consulting a doctor, uploads a prescription to an AI platform seeking a second opinion. The AI explains the diagnosis accurately but also recommends an additional medical test. Concerned, the patient spends money on the test, only for the treating physician to later conclude that it was unnecessary.
The AI was not necessarily wrong. The test exists in medical literature and may be clinically relevant under certain circumstances. What it lacked was the complete picture—the patient's medical history, physical examination, associated symptoms, severity of illness and the doctor's clinical judgement.
"The same thing can happen in financial planning," Govila cautions.
A chatbot may confidently evaluate a portfolio by commenting on recent returns, expense ratios, sector allocation, diversification or overlapping holdings. Many of its observations may be technically correct. Yet, he argues, the analysis remains incomplete because the AI has seen only what the investor uploaded.
"It may not know your goals, pension, income, liabilities, tax position, children's education plans, retirement needs, insurance cover, emergency corpus or how you behave during market volatility," Govila says, underscoring the limits of AI-driven financial analysis.
Nor does it know why a particular fund was selected, why another was deliberately avoided or which investment is intended for which financial goal.
"A portfolio is not a collection of mutual funds or stocks. It is a structure built around a family's life."
Govila believes this absence of context often leads to unnecessary anxiety.
One example is portfolio overlap—a commonly discussed metric among investors. AI systems frequently flag overlapping holdings between mutual funds as evidence of poor diversification.
While such overlap may occasionally warrant review, Govila cautions against treating it as an automatic flaw.
Two fund managers may own the same stock for entirely different reasons. One may regard it as a long-term core holding, while another may hold it tactically for a shorter period. They may have entered at different valuations, with different investment objectives and varying roles within their portfolios. A numerical overlap alone cannot capture those nuances.
The same applies to expense ratios.
"A cheaper fund is not always better, and a higher-cost fund is not automatically unsuitable," Govila observes.
Costs are only one component of investment selection. Risk management, consistency, investment philosophy, taxation, liquidity and the role of the fund within an investor's broader financial plan are equally important. As artificial intelligence (AI) increasingly becomes the first port of call for investors seeking financial advice, experts are cautioning against mistaking algorithmic analysis for personalised financial planning.
While AI can scrutinise a portfolio in seconds, it cannot account for the family circumstances, financial goals and life events that underpin investment decisions, Col. (Retd.) Sanjeev Govila, CEO of Hum Fauji Initiatives, a financial planning firm, says, urging investors not to rely solely on AI-generated advice.
"Your portfolio may be patented."
Similarly, judging funds solely on recent returns may produce misleading conclusions.
"A fund that appears average over one year may still be doing exactly what it was selected to do."
Financial planning, Govila argues, is fundamentally different from ranking products.
AI is highly effective at answering the question posed to it. A financial planner, by contrast, often begins by examining whether the investor is asking the right question in the first place.
Questions such as "Which fund delivered the highest return?" differ significantly from "Which investment best supports my retirement?" Likewise, "How much overlap exists?" is very different from "Does this overlap undermine my family's long-term financial goals?"
The distinction highlights a broader limitation of AI.
The quality of its response depends heavily on the quality and completeness of the prompt. Change the wording of the question, omit a critical piece of information or ask another AI model, and the answer may change substantially.
Govila therefore recommends that investors actively challenge AI-generated responses rather than accepting them at face value.
He suggests asking four follow-up questions before drawing conclusions: What important information is missing from my question? Why could this answer be wrong for my situation? What is the opposite view? Would the recommendation change if my financial goal were three years away, ten years away or focused on retirement income?
Such questions, he says, make AI responses more balanced and create a better foundation for discussions with financial advisers.
The broader lesson extends beyond investing.
Across sectors—from healthcare and education to law and finance—AI is becoming a powerful decision-support tool rather than a substitute for professional judgement. It excels at identifying patterns, processing information and explaining complex subjects. What it cannot fully appreciate are the human factors that influence decisions: personal priorities, emotional responses, family circumstances and accountability for outcomes.
In finance, the costliest mistakes are often not mathematical errors but suitability errors. An investment product may be excellent in general and still be entirely inappropriate for a particular investor. A strategy suitable for a young professional may prove unsuitable for a retired defence officer dependent on pension income.
Govila believes AI should therefore be viewed as an intelligent assistant rather than an unquestionable authority.
"Use AI as a learning tool, a question generator and a second-opinion assistant," he says. "But before making any decision that affects your family's financial life, bring the question back into the full context of your financial plan."
His closing advice is perhaps the simplest—and the most relevant in the age of artificial intelligence.
"The better use of AI is not to ask, 'What should I do immediately?' It is to ask, 'What should I understand better before I decide?'"
