Artificial intelligence (AI) continues to disrupt and redefine personal finance. Finance students should be aware of the diverse and sophisticated AI programs available today that are making financial planning, investing, and risk management easier and more personalized than ever before. In this post, we’ll take a deeper look at some cutting-edge AI programs that are transforming personal finance for consumers and creating exciting opportunities for those in the finance field.
1. AI-Driven Financial Planning Platforms
AI-powered financial planning programs are becoming increasingly popular for individuals seeking personalized advice without the high cost of human financial planners. These platforms use machine learning algorithms to create tailored financial strategies based on an individual’s income, expenses, goals, and risk tolerance.
- Facet Wealth: Facet Wealth offers clients personalized financial planning through a combination of AI technology and human expertise. Their AI system assesses a user’s financial situation and provides recommendations for investment strategies, tax planning, and retirement savings. It adapts as the user’s financial status evolves. For finance students, understanding how hybrid models (AI + human advisors) work will be key as the finance industry moves towards automated yet personalized solutions.
- Personal Capital: This platform uses AI to integrate all aspects of a user’s financial life, from investments to retirement planning, offering an in-depth financial analysis. Personal Capital’s AI-driven dashboard aggregates assets, debts, and expenses, providing insights that help users plan their financial future. For finance students, learning about the AI-driven tools used to predict long-term wealth accumulation and tax optimization is crucial in understanding how these platforms create value.
2. AI-Based Risk Management Programs
AI is also making strides in risk management, helping individuals and companies better assess financial risk and make informed decisions. These programs use vast amounts of data to predict potential market fluctuations, assess the risk of investments, and help users make safer financial choices.
- Kensho: Now a part of S&P Global, Kensho offers AI-based tools that analyze financial data and provide real-time insights on potential market risks. By utilizing advanced analytics, Kensho’s programs assist users in understanding how various events—economic, political, or social—might affect financial markets. For finance students, Kensho provides a strong example of how AI can be used to interpret large datasets for predictive risk analysis.
- Zest AI: This platform uses machine learning to provide predictive credit risk modeling, helping lenders make more accurate decisions. Zest AI’s models assess an applicant’s creditworthiness by considering factors beyond the traditional credit score, such as employment history, income trends, and even social media activity. Finance students should note how AI can reduce bias and improve the accuracy of financial risk assessments.
3. AI-Powered Credit Scoring Systems
Traditional credit scoring systems are being challenged by AI-powered alternatives that offer a more nuanced view of an individual’s creditworthiness. These AI-driven systems use non-traditional data sources, such as spending behavior, income patterns, and even social factors, to create a more holistic credit score.
- Upstart: Upstart’s AI-driven lending platform uses machine learning to assess loan applicants, going beyond the standard credit score to analyze a broader set of data, such as education and employment history. It is particularly useful for individuals with little to no credit history, offering them more access to loans. Finance students should pay attention to how AI is expanding the scope of lending and credit assessment in ways that could influence future financial regulations and lending standards.
- FICO® Score 10 T: FICO’s latest version of its credit scoring system uses AI to incorporate trended data, allowing lenders to see a more dynamic picture of a borrower’s financial behavior over time. This new model helps provide a better prediction of a consumer’s ability to repay debt, offering a more accurate credit score. Students focusing on risk and credit management can explore how AI enhances the precision of credit assessments, improving lending decisions.
4. AI-Powered Tax Optimization Tools
Taxes are a complicated aspect of personal finance, and AI is stepping in to simplify and optimize tax-related decision-making. AI-powered tax optimization tools can help individuals maximize deductions, identify tax-saving opportunities, and avoid common filing mistakes.
- TurboTax Live with SmartLook: TurboTax uses AI to provide users with personalized tax advice and answer complex tax questions through a live chat feature. Their AI system analyzes a user’s financial situation and suggests tax deductions or credits they may qualify for, helping users maximize their refunds or reduce liabilities. For finance students, understanding the role of AI in streamlining tax preparation and offering personalized guidance will be key for future work in accounting and tax planning.
- H&R Block’s AI Tools: H&R Block is also using AI to provide better tax advice by offering tools that analyze users’ financial history and suggest tax-saving strategies. Their AI system integrates with popular accounting software and financial accounts to recommend the best tax filing options for clients, offering real-time guidance throughout the process.