Research Insight | Integrating Ethics in All Aspects of AI-Based Financial Advice
AI-based financial advice is transforming how consumers approach complex money decisions. Traditionally the domain of human advisors, emerging AI technology in finance promises greater accessibility and efficiency—but it also comes with ethical risks regarding autonomy, harm prevention, fairness, accountability, and trust. Currently, AI financial tools can offer tailored recommendations using a person’s sociodemographic data, preferences, and goals. While effective, these tools risk perpetuating biases, such as offering less personalized advice to marginalized groups or overfitting to past market trends. In addition, the complexity of AI-based financial advice may lead organizations to expand their capabilities hastily, potentially overlooking ethical considerations—not to mention the challenges in making machine learning algorithms explainable and transparent.
To ensure AI-driven financial advice truly supports consumer well-being, this Journal of Public Policy & Marketing study introduces the AI4 Ethical Financial Services (AI4ES) framework, which guides financial organizations in embedding ethics throughout the entire AI lifecycle, from conception and design to development and deployment.
The study also calls for policymakers to urgently create specific rules for AI-based financial advice. Only by addressing the ethical challenges of this technology can it truly reach its full potential.
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What You Need to Know
- Existing laws and regulations are not always sufficient to address issues that could (un)intentionally impact well-being.
- Five core ethical considerations in AI-based financial advice include: human autonomy, prevention of harm, fairness, accountability, and trust.
- The AI4 Ethical Financial Services (AI4ES) framework developed in the study supports ethical reflection across every AI lifecycle stage, from conception to deployment. Organizations can adopt the AI4ES framework to incorporate ethics effectively into their financial services.
Abstract
This article presents a first step in identifying the ethical issues of AI-based financial advice. Consumers must navigate an ever more complex array of financial decisions. (Generative) AI-based financial advice may increase access to and acceptance of financial advice and strengthen consumers’ financial well-being. However, significant ethical challenges exist in designing, developing, and deploying AI-based financial advice. To analyze the perils and pitfalls of AI-based financial advice, the authors develop a definition of what constitutes good AI-based financial advice and provide a first assessment of ethical challenges related to AI-based financial advice. The iterative multistakeholder approach, including workshops and semistructured interviews with consumers and experts, results in an ethical discourse structured around the four fundamental values of the European Commission’s Ethics Guidelines for Trustworthy AI—human autonomy, explicability, fairness, and prevention of harm—and trust as the overall objectives. Based on the analyses, the authors derive a simple yet comprehensive AI Ethics Framework for Financial Advice. This reflection framework guides public policy makers, managers of financial service providers, and technology developers in incorporating ethical discourse in developing and deploying (generative) AI-based financial advice.
Lisa Brüggen, Robert Gianni, Floris de Haan, Jens Hogreve, Darian Meacham, Thomas Post, and Minou van der Werf, “AI-Based Financial Advice: An Ethical Discourse on AI-Based Financial Advice and Ethical Reflection Framework,” Journal of Public Policy & Marketing. doi:10.1177/07439156241302279.