In 2008,not even two decades ago, the first attempts were made to establish a robotic advisory investment platform in the United States. Now, in 2023, most people do not know the name of either of these programs. As artificial intelligence, ChatGPT, and the automation of many daily tasks become significant parts of our lives, it’s important to think about the implications of artificial intelligence on investing.

At its core, robo-advising relies on an algorithm that generates an investment portfolio for an individual based on a series of pre-programmed questions, including net worth, average income, risk tolerance, and financial goals.

The reported advantage of this method is that, supposedly, your most efficient investment portfolio is delivered to you without incurring the cost of a financial adviser. However, in erasing the adviser from the question, you also erase their experience, market knowledge, and personal investment in you and your unique goals.

The core issue with this method is that the basic human nature of an investor is discounted. This is ultimately the fatal flaw of robo-advising because human nature itself is the determining factor in long-term investment outcomes.

Inevitably, the AI machine will want something that directly counters the investor’s desire. AI might want to ease up on investing in a current hot sector of the market and invest in a cyclically lagging area, while human nature immediately wants to pour all their money into the current hot sector. Or AI might want to increase investments as the market crashes, while human nature screams to bail on the market and convert to cash.

When that inevitable day comes, human nature will win and the investor will simply overrule the machine. The investor will lose, in spite of himself.

On every side of the conversation, we are hearing that AI will be the answer to all our woes – that it will make investing so much easier because it erases the need for a financial adviser. But with AI, who will save the investor from himself?

Until AI can keep investors prudently diversified even during onslaughts of financial journalism advising otherwise, or until AI can help investors ride out concerns in a fluctuating market, or until AI can evaluate the ever-changing goals of an individual and their family, I far prefer the alternative…a financial adviser you know and trust.

A good adviser, like any one of our talented team members here at GDS Wealth Management, is as invested in you and your goals as they are in managing your finances. For more information on our team or to learn more about our services, contact our office at (469)212-8072or

Glen D. Smith, CFP®, CRPC®
Chief Executive Officer | Chief Investment Officer | Founder

GDS Wealth Management is an investment adviser in Flower Mound, TX. GDS Wealth Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. GDS Wealth Management only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of GDS Wealth Management's current written disclosure brochure filed with the SEC which discusses among other things, GDS Wealth Management’s business practices, services, and fees, is available through the SEC's website at: 

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