AI can be a powerful tool for DIY investors

Research shows that Brits are fast adopting AI tools when researching and making decisions around stock market investments, particularly younger DIY investors, with IA & Opinium surveys finding 34% of 18-40 yr-olds using AI to find information about investing versus 12% of those 55 yrs and older¹.

They seem to have arrived at an opportune moment: easing access to important financial information in an economy where financial education is lacking, regulated advice is costly and retail investment is the lowest of any G7 nation².

Yet risks have emerged with their use too, with research showing a level of misunderstanding over the accuracy of answers and the protection that regulators provide in the event of poor recommendations.

Here, we explore their benefits and risks and offer some tips for using AI tools correctly.

Could AI tools shift the balance

The benefits of AI tools seem fairly clear: algorithms are able to scour online sources in the blink of an eye, summarise complex topics in jargon-free, everyday language, tailor information to the specific queries, and point users to a variety of sources for further evaluation.

One in five adults are now open to using AI tools, helping them make complex, high-stakes financial decisions, such as those relating to managing debt, pensions or investments4. Research even shows they’re becoming more trusted than traditional sources of information, including TV, radio and press, or social media ‘finfluencers’, whose popularity has soared with DIY investors in recent years³.

The financial services regulator, the Financial Conduct Authority (FCA), sees the benefits in us using them, believing that they could help address some of the “longstanding weaknesses in retail financial markets”, where uptake of financial advice remains poor and an estimated £300bn of savings is languishing in low interest baring accounts and deemed ‘suboptimal’⁴. Perhaps usefully, they’ve emerged at a time when the government, through its Leeds reforms, has been encouraging the public to consider the benefits of stock market investing for longer-term goals and wealth building².

Yet the FCA have a few concerns too. Answers have been found to be inaccurate as AIs take information from outdated sources or misinterpret findings and fill in the blanks with waffly nonsense. Given responses come across as authoritative and compelling, users can find themselves easily convinced.

Users also appear to be conflating answers with financial advice, which is tailored to your personal circumstances by a regulated financial adviser and comes with complaints procedures and potentially compensation if it’s unsuitable. Research found that almost half (44%) of those surveyed mistakenly believed AI-generated financial information is regulated, and around a third (32%) wrongly thought they'd get compensation from the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service if AI advice led to loss-making decisions³.

All of this presents a challenge for regulators, who will need to balance the risks of AI-generated misinformation with implementing over-zealous rules that could stifle information and push DIY investors towards poorer quality sources, as some would argue tighter regulation of advice has pushed them towards finfluencers (and some dubious ones at that).

Here’s some tips for using AI tools when researching information about investing.

Tips for using AI tools

1. Stay in the driving seat – AI tools are an aggregator of information and their conclusions mustn’t be wholly relied upon. It’s important to click through to sources and form your own conclusions. AI responses are really just a starting point.

2. Check sources – all sources of information aren’t created equal: some are vastly more credible than others, which means they need reviewing. Somewhat usefully, you can prompt your AI tools to seek more credible sources – think of government websites, mainstream journalism or well-known investment brands such as Alliance Witan.

3. Don’t confuse AI answers with regulated financial advice – a significant amount of work and analysis goes into financial advice and planning, whereas AI responses can be inaccurate, particularly when presented with complex scenarios. If you feel you need an added layer of comfort, it may be worth considering paying for advice.

4. Appreciate that there are no safety nets – you may have legal grounds for recourse or be able to pursue a compensation claim through the financial ombudsmen if your financial adviser gives you unsuitable advice (remember you may still face investment loses even if the advice is perfectly suitable). There are no such protections with poor recommendations from AI tools.

5. Past performance remains a poor guide to the future – as a tightly regulated industry we are careful to make clear that the future performance of investments is highly uncertain and may lead to loses; it is in taking these risks that there is the possibility of a higher return relative to safer options such as cash savings. AI tools are similarly unable to make predictions about future returns, no matter how convincing their forecasts may sound.

6. AI doesn’t change the basic principles of long term investing – no matter how clever AI tools may seem, it shouldn’t change how you approach managing investment risks. At Alliance Witan, we believe that well-diversified long term global investing offers a sensible approach for building long-term wealth, which is why we avoid having too many eggs in one basket and invest across a balanced mix of different markets, sectors and investment styles.

¹ IA Funds Symposium, 1st October 2026

² https://www.gov.uk/government/news/leeds-reforms-to-rewire-financial-system-boost-investment-and-create-skilled-jobs-across-uk (accessed 3 November 2026)

³ https://www.fca.org.uk/news/press-releases/young-investors-trust-ai-more-tv-or-celebrities?utm_source=chatgpt.com (accessed 3 November 2026)

⁴ https://www.fca.org.uk/publication/corporate/the-mills-review.pdf (accessed 3 November 2026)

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