Should You Bet Your Financial Future on Artificial Intelligence?

We are in a blog series discussing how strategies for running marathons could help you maximize your wealth in a meaningful way. So far, we have covered:

Strategy #1: Know your why.
Strategy #2: Why you need a contingency plan.
Strategy #3: What to do when your plan hits the fan.

In today’s money marathon post, we are exploring how you might be able to get more mileage out of your money and out of your training if you happen to be running. Today’s post asks a simple question: are you willing to bet your financial future on artificial intelligence?

So, let’s peel back the onion and have some fun. Should you bet your marathon pace on artificial intelligence? And then, we’ll talk about how that translates into your financial paces and financial future. And should you bet your financial future on artificial intelligence?

I’m going to give you three simple reasons why you should not bet your future or your race time on artificial intelligence. Let’s talk running first. I recently looked at my Garmin watch, and you can see it predicted my lactate threshold at 7 minutes and 6 seconds per mile in the picture below.

If you convert that to a marathon time, some experts suggest that you can run about 95 percent of your threshold pace for a marathon. For me, my Garmin marathon pace conversion at seven minutes and six seconds per mile results in a marathon time of three hours and 15 minutes.

That’s probably with decent conditions, decent weather, and being healthy. I found myself needing to ask that question because I was worrying so much about my pace. I’d worry about it at night, I worried about it in the morning, and after all, I wanted to make the most of my training, which could be hundreds of hours, for the upcoming Twin Cities Marathon.

Reason #1: Life is too short to worry about money or your race pace

And that is the number one reason you should not rely on artificial intelligence for your race pace or financial future, wondering if your financial future is secure if you bet on AI. You might be like me and many clients I’ve worked with. They don’t trust the formula, they don’t trust the spreadsheet, they don’t trust the simple calculator on their 401(k)’s website (that might give you a green light, a yellow light, or a red light) because they don’t know if the inputs are appropriate.

Here’s what I found out when I put my Garmin to the test. I recently went to the University of Minnesota and did some lactate threshold testing with an awesome runner. His name’s Aaron Esker, and he’s a running coach and a grad student at the U of M. He’s a big-time runner, just a few seconds away from qualifying for the Olympic trial. He knows his stuff! He’s in the lab reading my lactate threshold levels, where basically you’re breathing into a mask, and he’s taking my blood every few minutes throughout the test to figure out my actual threshold, which tells me what paces I can run.

And guess what? The Garmin was way off! Do not bet your race time on the Garmin because the results he gave me (see below) show that my lactate threshold pace is around 6 minutes and 16 seconds per mile.

When we convert that into a marathon time using 95 percent of that pace, my time could be two hours and 52 minutes if I’m healthy and under some decent race conditions (like if it’s not too hilly or hot). That’s almost a 12 percent difference in my race time!

Now, this doesn’t correlate exactly to what your financial results will be if you go into a financial lab or your financial planner’s office instead of just looking at a simple formula. But imagine if you could retire 12% percent earlier or spend 12% more per year on what you want to spend it on.

Maybe that’s the next vacation or helping a loved one through college or a family member through a tough time. It may be saving less money because you’re actually ahead of schedule, and your financial watch or artificial intelligence wasn’t telling the most accurate story.

So that’s one out of three reasons why you shouldn’t rely on artificial intelligence. Life is just too short to spend it worrying about your money, your retirement, and your race pace. The takeaway is to get into a financial lab, to a planner’s office specializing in wealth management and retirement planning, to figure out if you are really on track. Go through the inputs and make a plan that’s relevant and realistic.

Reason #2: AI Calculations are often inaccurate

Reason number two that you shouldn’t rely on artificial intelligence is I can tell you that I have found that AI calculations are often inaccurate. I’ve used many retirement calculators, and they don’t see the whole picture because they don’t ask the right questions.

For example, a client recently came into my office. They showed me their 401(k) printout, which said they essentially had a green light. Their future was secure, and they should feel good that they were on track. Well, here’s the problem. The plan didn’t take into account the spouse’s spending, the spouse’s age, their assets, and their debt.

This couple had a lot of debt, which didn’t look great for their financial future. On the flip side, I’ve seen people come in, and their retirement calculator gave them a red light. It said they needed to do more. But the spouse in this example had a lot of income in retirement from social security and a pension. So, the AI was giving this false picture.

I’ve seen this many times over the last 20 years and even personally when I’ve tested these calculators. They just aren’t accurate very often. So that’s another reason you shouldn’t bet your financial future on AI without getting a second opinion.

Reason #3: AI doesn’t understand your values

The last reason you shouldn’t bet your financial future on AI is that it doesn’t consider your values. I have yet to see artificial intelligence financial planning software or online wealth management software understand a client’s values. I have yet to see a time when they use those values to help clients set relevant goals.

Relevant goals lead to more accurate assumptions, financially, for what things might cost. Maybe it’s a car replacement, maybe it’s a giving amount. It may be a particular lifestyle, travel, home improvements, or home maintenance. Almost every time I go through a values-centered goal-setting process with my clients, we uncover a new goal.

I cannot guarantee anything in my line of work; regulations actually prohibit it. But, if I could guarantee something, if that were possible, I would guarantee people that if you go through a values-centered planning process, you’re going to uncover something new. You’re going to uncover a new goal, whether you’re single or married.

And if you are married or in a relationship doing this with your partner, this is a great opportunity to get on the same page. I have never been through a conversation with a couple who’s looked at their values to set goals individually, who hasn’t learned something, who hasn’t changed the goals in their plan.

So, that’s the third reason I would not rely on artificial intelligence. If you do, unless it has a values-centered planning process, which typically requires a coach (somebody like me) or a life coach specializing in money, it will not uncover certain goals. Therefore, the plan projections won’t be accurate.

I hope this post gave you some practical ideas to get more out of your money and steps to stop worrying about your future. If you have been relying on artificial intelligence, or you don’t have a financial plan, or you want a second opinion, click here to schedule a 90-minute, no-cost consultation.

And if you happen to be training for a marathon, I’d urge you to get into a lab!