AI Financial Advisers Target Young People Living Paycheck to Paycheck

AI's Promise in Personal Finance

Artificial intelligence is revolutionizing the way young people manage their finances, with promises of bespoke financial advice without the hefty price tag of traditional human advisors. AI companies envision a future where individuals can reach their personal and financial aspirations with the help of AI applications. These applications could range from workout plans to health monitoring, and notably, financial planning.

Exploring AI Financial Tools

Aiming to be debt-free, I ventured into the realm of AI financial advisers. The expense of hiring professional financial planners has driven younger generations, often living paycheck to paycheck, towards AI solutions. On Apple's list of popular finance apps, Cleo AI and Bright stood out for their chatbots designed to tackle monetary issues.

Connecting and Engaging with AI

Both Cleo AI and Bright use a service called Plaid to connect users' bank accounts to their apps, enabling a breakdown of spending habits and offering ways to pay off debt and build credit. Barney Hussey-Yeo, founder of Cleo AI, describes the app as a personal coach, offering tailored advice to help users make informed financial decisions.

Discoveries and Limitations

While Cleo's advice sometimes strayed into upselling territory, it had elements of engagement, such as humorous critiques of spending behaviors. Cleo, like Bright, occasionally leveraged personal data more for promoting additional services than delivering comprehensive financial guidance.

Cleo's Cash Advance Model

Cleo often targeted its core demographic—young individuals struggling financially—by suggesting cash advances through a subscription model. The app prompted users to sign up for Cleo Plus at $6 a month, offering cash advances with conditions, such as express fees for instant transfers. With a significant portion of Cleo's revenue stemming from these cash advances, the app's allure poses a potential debt trap rather than a viable financial solution.

Bright's Loan Options

In contrast, Bright's AI assistant costs $39 for three months, touting access to larger loans of up to $10,000. However, the experience was marred by errors, including incorrect account fee calculations, highlighting the imperfections in these AI-driven financial services.