Key Takeaways

• 37% of Americans already use AI to manage their finances, primarily for learning, budgeting, and building savings (Ipsos/BMO survey).
• The global robo-advisor market was valued at $1.4 trillion in 2024 and is projected to reach $3.2 trillion by 2033.
• First-time investors make up 45% of new robo-advisor users in 2025, with micro-investing features as the primary draw.
• Fully automated platforms have a 68% adoption rate among millennial and Gen Z users.
• Apps like Betterment, Monarch, and Cleo offer entry-level plans ranging from free to under $15/month.
• Deloitte predicts generative AI will become the leading source of retail investment advice by 2027, reaching 78% usage by 2028.
• AI tools carry real limitations: they cannot replace certified financial planners for tax strategy, estate planning, or complex legal matters.
• Data privacy and AI hallucination remain active concerns for users of these platforms.

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For millions of people who assumed that financial advice was reserved for the wealthy, AI-powered tools are changing that equation. A growing wave of free and low-cost apps now offers first-time investors automated budgeting, goal tracking, portfolio management, and personalized guidance — services that previously required paying thousands to a certified financial planner. With 37% of Americans already reporting they use AI to help manage their finances, according to an Ipsos survey for BMO, these platforms are quickly becoming the default entry point for younger and lower-income users who want to start investing without a large upfront commitment.

The numbers confirm a real shift in who gets access to financial planning. Only 35% of Americans have a financial plan at all, according to the World Economic Forum, with cost, limited advisor access, and discomfort discussing money cited as the main barriers. In Europe, 82% of respondents in a 2023 European Commission survey said they had medium or low financial literacy — even though 71% claimed to set financial goals. AI-powered platforms are stepping directly into that gap, providing entry at price points that traditional advisors cannot match.

Why Traditional Financial Advice Has Left Most People Behind

Certified financial planners typically charge thousands of dollars per year or require sizable minimum assets before taking on a client. That model works for high-net-worth households, but it effectively locks out anyone just starting their career, paying off student loans, or earning a modest income.

“Wealth management has traditionally been seen as a high barrier-to-entry space,” said Gloria Garcia Cisneros, a certified financial professional at wealth management firm LourdMurray. “For those just starting out or with more basic needs, AI tools and robo-advisors can provide more affordable options and at least help them get started.”

The result has been widespread reliance on fragmented advice — a patchwork of online calculators, bank recommendations, social media tips, and family guidance. In 2023, about 47% of investors turned to friends and family as their primary source of financial advice, according to Deloitte’s Center for Financial Services. Only 35% used a financial advisor. The average investor relied on 2.1 sources of advice to make investment decisions, none of which were necessarily tailored to their personal situation.

How AI Financial Tools Actually Work

Most AI-powered financial platforms follow a similar onboarding pattern. Users connect their checking accounts, savings accounts, and credit cards. The AI then reviews transaction histories, analyzes spending patterns, and observes financial behavior over time. From that foundation, the platform delivers automated transaction categorization, budgeting suggestions, spending alerts, and goal-based recommendations.

What separates AI from older digital tools is the ability to surface insights proactively. Fernanda Dobal, product director of AI and chat at Cleo, described the distinction: “What really sets AI tech apart is proactively surfacing insights that might be helpful rather than waiting for user input — we are proactive versus reactive.”

Behind the scenes, many of these platforms use a combination of large language models, algorithms, and human oversight. Rachel Lawrence, a certified financial planner and head of advice and planning at Monarch, noted that qualified professionals review the output: “They’re reviewing answers and making sure our AI tool is on track. We’re actively correcting things we don’t believe are good answers.”

Popular AI Finance Apps for Beginners

Three platforms stand out for users who are just getting started with investing and budgeting.

Betterment uses algorithms driven by large math models paired with human oversight to manage portfolios. There is no minimum balance for automated investing accounts. The fee structure is 0.25% annually for accounts up to $1 million.

Monarch provides an AI assistant that answers user questions about their finances, identifies trends, and delivers a weekly recap summarizing major money shifts. Users pay either $14.99 monthly or $99 annually.

Cleo’s free plan gives access to its AI chatbot, basic budgeting, spending categorization, and cash flow insights. Premium plans, ranging from $2.99 to $14.99 per month, add features like cash advances, credit score access, and higher-interest automated savings.

The Comfort Factor: Why Young Investors Prefer AI

Cost is not the only reason younger users are gravitating toward AI-powered financial tools. A psychological factor plays an equally large role: reduced judgment.

“A lot of people report talking to an AI feeling more comfortable than talking to a financial expert, because they come without much knowledge and feel the AI won’t judge them,” Dobal said.

This dynamic is visible in adoption data. Fully automated investment platforms have a 68% adoption rate among millennial and Gen Z users in 2025, according to market research. First-time investors account for 45% of new robo-advisor users, with micro-investing features serving as the primary draw. Gen Z alone represents about 30% of the robo-advisor user base, driven by a preference for digital-first solutions.

Women investors represent roughly 40% of robo-advisor users in 2025, a figure that has grown as platforms have focused on inclusivity and tailored marketing. AI can address specific challenges that women face more frequently, such as gaps in earnings from time out of the workforce and different longevity risk profiles.

Generative AI Is About to Reshape Where Investors Go for Advice

The current wave of budgeting chatbots and automated portfolios may be just the beginning. Deloitte’s Center for Financial Services predicts that generative AI-enabled applications will grow from their current early stage to 78% usage among retail investors by 2028 — and could become the leading source of retail investment advice as soon as 2027.

That prediction carries significant implications for how the advice industry is structured. Deloitte projects that financial websites without generative AI capabilities will see their share of investor usage drop from 28% in 2023 to just 9% by 2028. Investors will increasingly expect platforms to tailor content to their individual needs using AI, and financial institutions will build those capabilities into their existing services.

Financial advisors who offer limited-scope services may face the greatest disruption. Deloitte’s model predicts the percentage of retail investors using advisors will drop from 35% to 31%, even as the overall number of advice sources grows by about 20%. The decline is expected to concentrate among advisors offering narrow product ranges — those who can only recommend mutual funds and variable annuities, for instance, rather than ETFs, individual stocks, or alternative investments.

Meanwhile, the sources of advice that are most resistant to AI displacement are friends and family, projected to drop by just 1% over five years. The reason is straightforward: they are always available, always free, and the emotional connection is hard to replicate — even if the quality of their advice is objectively low.

Where AI Financial Advice Falls Short

AI-powered tools are not a replacement for a certified financial planner, and the gap becomes clear once a user’s financial situation grows more complex.

These platforms generally cannot provide guidance on tax strategy, estate planning, legal matters, or highly specialized investment scenarios. A user juggling multiple accounts, dealing with inheritance questions, or planning for a child’s financial future will likely need a human advisor, as Morningstar’s 2025 analysis of 16 digital advice providers confirmed.

Two additional risks deserve attention. First, AI hallucination — when systems generate inaccurate or misleading advice — remains an active concern. Users should cross-check important recommendations rather than acting on AI output alone. Second, data privacy is a significant consideration. Users typically need to connect their bank and credit card accounts to these platforms, and understanding exactly how that data is used requires reviewing each app’s privacy policy carefully before agreeing to terms.

Gloria Garcia Cisneros emphasized that the strongest approach combines both: “The ideal solution is AI integrated with humans, where technology makes us better at what humans do best, giving personalized advice. That way, we can optimize our time to be fully present with clients, doing the human side.”

The Market Behind AI-Powered Financial Advice

The scale of investment flowing into this space underscores how seriously the financial industry is treating AI advisory tools.

AI-powered robo-advisors now manage over $1.26 trillion in assets globally. Betterment alone reports $65 billion in assets under management and over 1 million customers. Wealthfront reported 1.3 million funded clients and about $88 billion in assets. Robinhood’s Strategies product surpassed $1 billion in assets under management within its first six months.

Hybrid models — platforms combining automated algorithms with access to human advisors — have grown by roughly 40% in 2025. This indicates that pure automation is not the final destination for most investors. Instead, the winning formula appears to be affordable AI for day-to-day management with the option to consult a human for more complex decisions.

What First-Time Investors Should Do Now

For someone who has never invested and feels uncertain about where to start, AI-powered tools offer a practical first step. They can teach basic financial concepts, automate budgeting, and build a portfolio at a fraction of the cost of a traditional advisor. The barrier to entry has dropped to nearly zero — some platforms require no minimum balance and charge nothing for basic features.

That said, a clear-eyed approach matters. Use AI tools for education, budgeting, and automated investing. Check the output for accuracy. Read the privacy policies. And as your financial situation grows more complex — multiple income sources, real estate, tax planning, inheritance — recognize when it is time to bring in a qualified human advisor.

The financial advice gap has persisted for decades because professional guidance was priced beyond what most people could afford. AI is not a perfect solution, but for the tens of millions of first-time investors who previously had no affordable option at all, it is a meaningful one.

If you are interested in this topic, we suggest you check our articles:

• 2026 Leading AI Investment Countries by Continent
• 5 Biggest AI Financial Investments in 2025
• AI Consultant Cost: A Worthy Investment?

Sources: World Economic Forum, Deloitte, CNBC

Written by Alius Noreika