September 11, 2025 • 23 mins
It's looking very much like 2025 is going to be the year that Artificial Intelligence changes the investment sector beyond recognition. A hot spot of this change is going to be financial advice. So what can AI offer? Today my guest is Microsoft's 'Co-pilot' AI bot (ably assisted by human financial adviser James Gerrard)
In this episode, we cover:
- AI for the investment beginner
- Testing Ai for advanced investment information
- Where Ai gets it wrong
- Ai - The IQ is excellent, the EQ not so much!
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Hello and welcome to The Australian's Money Puzzle podcast. I'm
James Kirby. Welcome aboard everybody. It looks very much like
twenty twenty five is shaping up as the year artificial
intelligence really changes the game for investors. And in today's show,
I've got two guests. I've got financial advisor James Gerard,
(00:30):
who you know, and an AI chatbot in the form
of Microsoft's co Pilot. Now, in each segment of the show,
I start by interviewing the AI copilot, and then my
very human financial advisor guest, James Girard, reviews the quality
basically of what's been offered for free by this remarkable
(00:52):
new technology. Okay, stand by, here we go. Thank you for.
Speaker 2 (01:00):
Coming on, Thanks for having me, James.
Speaker 1 (01:03):
Okay, let's get into it. I really just want to
figure out how to start. You know, how do I
begin as an investor? Is there certain books or very
well known courses perhaps I could.
Speaker 2 (01:12):
Do starting out as an investor? You want to look
at the basics first. There's a classic book called The
Intelligent Investor by Benjamin Graham that's really useful, and you
can find online courses too. It's about getting a good
grasp on the fundamentals before diving into the market.
Speaker 1 (01:31):
Yeah, thank you. Okay, Well, the thing is, I looked
at the Benjamin Graham books and they written a long
time ago. I mean, I find that those books very difficult,
that they're beyond me. Really, I'm looking for something much
more elementary, you know, like a introduction perhaps to personal investing.
Speaker 2 (01:45):
Got it. The older stuff can be a bit dense.
For something more digestible, you might check out A Random
Walk down Wall Street by Burton Malkiel. It's a bit
more approachable for beginners and talks about the basics of
investing in the stock market.
Speaker 1 (02:02):
Yeah, very good. I like that idea. I know that
basics of the stock market that would be useful. One
of the things I think that's happened since was it
Burton Malkiel wrote that book? Of course, it's again it's
a long time ago, and it's a bit dense, you know, Like,
which is better? Can you tell me? The shares or
the ETFs.
Speaker 2 (02:20):
ETFs have really changed the game. They offer diversification and
tend to have lower fees compared to buying individual shares.
It's not necessarily about one being better than the other.
It depends on your strategy. ETFs can be a good
starting point for beginners because of the built in diversification.
What's your goal with investing?
Speaker 1 (02:40):
My goal? Look, my goal with investing is like any
other goal, which is to make as much money as possible.
I suppose one of the things that sort of is
a dilemma for me is whether I buy shares or
exchange traded funds. As you say, maybe they're interchangeable, but
which do you think? Whether I should buy shares or property?
Because house price is also going up pretty.
Speaker 2 (03:01):
Fast, Property can be a solid investment, especially if you're
thinking long term. It's a tangible asset and has potential
for appreciation and rental income. Shares and ETFs are more liquid,
but property offers a different kind of stability. Diversifying across
asset classes could balance out your portfolio. What's your risk tolerance?
Speaker 1 (03:24):
Like my risk tolerance? My risk tolerance is normal. I
suppose One of the things I'm wondering is though, if
I'm paying down my home loan right at the moment,
my mortgage, maybe I'd be better off doing some investing.
Is there any sort of surveys that suggests which is
better and keep in mind I live in Australia.
Speaker 2 (03:43):
It really depends on your specific situation. Paying down your
mortgage can be a safe bet because it reduces debt
and can save you on interest. Investing could potentially offer
higher returns, but it comes with risks. Consider speaking with
a financial advisor who knows the Australian market.
Speaker 1 (04:01):
Well, okay, yes, well. One of the things I'm hoping
to get ASPUS is, you know, without going to an advisor,
maybe gets some information from you because you seem to
be across investment data. One of the things we have
here is this choice between putting money aside for the pension,
you know, for later life, or putting money into mortgage.
It's difficult to assess how much do you need in
(04:22):
this area? How much do you need to retire? How
do you estimate these things?
Speaker 2 (04:27):
Retirement needs can vary greatly. A common rule of thumb
is aiming for around seventy to eighty percent of your
current income annually in retirement. This includes your pension savings
and any investments, but it really depends on your lifestyle,
health care needs, and life expectancy. It's a balancing act.
Speaker 1 (04:45):
Oh yeah, where did you get that number? For the
rule of thumb, the seventy to eighty percent. It sounds
has high to me. I'd love to have that level,
you know, of income in my own retirement.
Speaker 2 (04:55):
The seventy to eighty percent figure comes from financial planning guidelines.
It's based on the idea that retirees might spend less
on things like commuting or saving for retirement, but it
can vary. Some folks aim for more, especially if they
plan to travel or have high medical costs.
Speaker 1 (05:14):
Okay, okay, and what would you say financial planning guidelines?
What which guidelines are you referring to?
Speaker 2 (05:21):
I'm talking about advice from financial planners and experts.
Speaker 1 (05:24):
Can you name who the financial planners are? I mean, like,
is it an association some sort? Is there a qualification here?
Speaker 2 (05:31):
Sure? These guidelines often come from financial planning associations and
experts worldwide. In Australia, you've got bodies like the Financial
Planning Association FPA or the Association of Financial Advisors AFA.
Financial planners typically need qualifications and must meet certain standards
(05:53):
to give advice.
Speaker 1 (05:54):
Do you know how many financial advices there are in Australia.
I'd like to find one.
Speaker 2 (05:59):
There are thousands of financial advisors. I am not sure
of the exact number, but finding one might be easier
through the Financial Planning Association or the Australian Securities and
Investments Commission website.
Speaker 1 (06:11):
Okay, pretty so, thank you well, James Gerard, human financial advisor.
That was pretty spooky. I found it spooky because I'd
been talking at that point to the bot for this
is edited versions you're hearing, folks, I'd been talking to
it for about half an hour and I was starting
It never gets emotional, of course, but you know, I
was starting to respond like I was talking to a character.
(06:35):
First thing I think we have to put on the
table is it's probably right. I mean, a lot of
the elementary financial advice, Why on earth would you pay
three thousand a year to get basic questions answered when
you can get them answered with AI. Am I being
brutally simplistic or is that true? I think it's true, James.
Speaker 3 (06:55):
People will be jumping onto AI more and more to
typing these basic questions, and that's a threat to all
financial advisors where they're just focusing on the basics. So
I think what's going to happen with the financial advisory
industry is that everybody will need to skill up and
level up. So where there's very complex situation, not even
complex situations, complex decisions to be made, where there's maybe
(07:17):
five to ten different potential pathways where someone could go
with an investment or the way they structure something, it's
very difficult to capture that in a very full discussion
and overlay that judgment, that human judgment, because AI is
taking data, it's listening to the import it's whacking out
what it thinks is best. But it does lack that
(07:39):
human element and I'm not sure if that can ever
be replicated because we have to take it to another degree.
Where As we sit in video calls or face to
face meetings with clients, us as human financial advisors, we
look at people's body language, how they react, and we
position our communication in a way that is in line
with how the person would like to receive it. So
(08:01):
some people in our stereotype engineers they love information, whereas
salespeople in directors they just want short, snappy answers. So
that's a very simple example of how we adapt in AI.
Can't see you.
Speaker 1 (08:13):
That's EQ right, that's EQ yeah, IQ. It's never going
to have the EQ yeah. That's an interesting point. And yeah,
there's one other thing which you mentioned. I think it's
the it's the killer point. Really, you have to know
the question to ask. And in a very almost paradoxical way,
part of this amazing leap in information supply from AI,
(08:35):
it means that knowing the questions to ask is more
important than ever. So you would think financial literacy is
less important, but in a way it's more important because
the people who can harness this other people who will
ask the right questions. But you're never going to know
the right questions unless you have some basics I think,
and then you think in terms of your industry. Basically
(08:59):
the whole thing moves up. Mar is that the ultimate
I'll come here.
Speaker 2 (09:03):
Yeah, I believe.
Speaker 3 (09:04):
So. I bet my last dollar that there's financial advisors
out there today who are typing in basic questions into
eye engines like what's the current contribution cap, what's catch
up concessional? So financial advisors are doing it every day.
Moms and dads and people general public are going to
do it as well. So the financial advisors need to
scale up. And one little AI tip would be that
if you don't know what questions to ask, or you
(09:27):
think there may be things that you're not completely aware of.
You can actually ask AI say all right, well, this
is my situation. I want to know this, but I'm
not sure what questions to ask. Can you help me
promptly ask? Tell me what questions I should be asking.
Speaker 1 (09:39):
All right, we're going to keep these segments short. There's
a lot to get through. So what we're going to
do in the next segment you'll hear in a moment.
Hello and welcome back to The Australian's Money Puzzle podcast.
(10:02):
I'm James Kirby, and my guest today is the Microsoft
co Pilot AI chatbot. We've been going fairly well so far.
I want to lift it a gear now and I
want to ask the co pilot a bit more elaborate,
bit more advanced questions about Super. For instance, So, okay,
can you tell me about Super in Australia. I live
(10:26):
in Australia. How much can I put into Super? Do
you know?
Speaker 2 (10:29):
Each year for the twenty twenty three to twenty twenty
four financial year you can contribute up to twenty seven thousand,
five hundred dollars in concessional before tax contributions.
Speaker 1 (10:42):
Uh huh, very good. Okay, that's really all I'm interested in.
Twenty seven five hundred. Now, we'll take it, right, we'll
take it on board. That's actually a bit out of
date because in fact it's gone up to thirty thousand
more recently. But still, Now, when I put the money
into SUPER, what happens? Is it tax free? Does it mean?
Does it go straight in? Or is or tax involved?
Speaker 2 (11:02):
When you put your before tax contributions into Super, like
salary sacrifice, they're generally taxed at fifteen percent, So it's
not tax free, but it's a lower tax rate compared
to most people's income tax rate.
Speaker 1 (11:16):
I understand. Okay, yeah, very useful. And in terms of
how much I can put into Super, there's a certain
amount that goes in by low, right, that I must
put in. The government makes me put in a certain amount.
How much is that? Yep?
Speaker 2 (11:28):
There's a compulsory amount. For the twenty twenty three to
twenty twenty four financial year, employers must contribute at least
eleven percent of your earnings to your super. This is
called the superannuation guarantee.
Speaker 1 (11:42):
Okay, right, very good superannuation guarantee. That's the minimum as
such that I must put into my Super Okay, can
I take It's my money right? So can I take
money out of SUPER before I retire?
Speaker 2 (11:56):
Generally, accessing SUPER before retirement is an allowed unless underspecific
conditions like severe financial hardship or certain medical situations. Once
you hit the preservation age, you can typically access it.
Speaker 1 (12:10):
The preservation age. What's the preservation age? What does that mean?
Speaker 2 (12:14):
Your preservation age is the minimum age you can generally
access your Super. In Australia, it ranges from fifty five
to sixty depending on when you were born.
Speaker 1 (12:25):
Uh huh, okay, okay. Now can I ask you there's
some changes going on in super where it once if
you had basically this new tax is coming in on
Super over three million. I thought Super was tax free.
I thought all income in Super was tax free.
Speaker 2 (12:40):
Super income is generally taxed lower than regular income, but
it's not always tax free. From July twenty twenty five,
over three million dollars will face higher tax rates on
the earnings. The idea is to ensure fairness in the system.
It might not affect everyone, but it's worth being aware
and seeking advice. If your balance is approaching that level, and.
Speaker 1 (13:04):
Is that the low? Now? Is that actually the low.
Speaker 2 (13:07):
Yes, it's set to become law starting in the financial
year twenty twenty five twenty six.
Speaker 1 (13:13):
Thank you very much. Okay, James Gerard, the human financial
advisor you were listening to that. I think it's amazing
that a US based app AIP could give us such
precise answers. This is the sort of thing that people
ask financial advisors at an elementary level when they go
in how much can I put in super? How much
(13:33):
can I put in pre tax, et cetera post text?
What did you think of the answers?
Speaker 3 (13:39):
I thought it was very interesting. The answers were mainly
technically correct. So when it talked about contribution, CAPS gave
a form of financial year's number. So currently it's thirty
thousand dollars for pre tax super contribution.
Speaker 1 (13:54):
So it was wrong, Okay, I spotted that. Obviously I
didn't want to get into an argument with a bot
on air, but it was as such, it was wrong.
But then, to be fair, it was not so much
wrong as out of date. It was right a couple
of years ago, but it was wrong right now. So
(14:14):
why is that you think?
Speaker 3 (14:17):
I think it's just the underlying data that's been sucked
into these various AI models may not be up to
date as yet, but that's a minor issue that will
improve as it has more linkage to contemporary websites and
access to live data. So I noticed that when it
came to the mandatory supernuation contributions, it did say twenty
(14:37):
twenty three twenty twenty four financial year, and it said
eleven percent. But we're not in twenty twenty three twenty four.
Speaker 1 (14:44):
No, But so then again, you know, to be fair,
it was correct, they were correct figures. They were just
out of date. That's that's right. And if that was
an employee of yours, one of your many employees, tell me,
what would you have I said in the performance review?
Would you have said? What would you have said? They
could have done better?
Speaker 3 (15:04):
They would have had to go brush up on their
technical skills, because that's just not up to scratch. We
can't go recommending clients with inaccurate technical information. And another
area was around the preservation age. Actually, this one was wrong.
It said fifty five, but it's actually sixty now, So
fifty five was quite a while ago. With the preservation age, Yeah,
what was.
Speaker 1 (15:23):
Quite a while ago. That's quite a file ago. That
was actually completely wrong. That's sixty four years.
Speaker 3 (15:28):
That's right, And the other observation is that it in
my opinion, it comes down to the prompting of what
you say to the AI bot in terms of what
the answer is. So with the super contributions, you asked it,
what's the rate of tax on supercontributions? That came out
at fifteen percent for concessional contributions, But if your income
is above two hundred and fifty thousand, it's actually thirty
(15:49):
percent contribution tax. So unless you knew that there's a
different tax for people above and below two hundred and
fifty thousand, the average Australian who's going to use chat
chip or some other AI machine to understand their finances
may not get the full pitch up because they're not
asking the right questions to it.
Speaker 1 (16:07):
Okay, very interesting, yeah questions, Even assuming let's put it
into side the fact that they were out of date,
there's no context and there is really relevant context here.
So for instance, on those that was true, the answer
was true up to income of two hundred and fifty thousand,
isn't that right? And if you were over two hundred
and fifty thousand in your annual income there's a thing
(16:28):
called Division two ninety three which kicks in, and there's
another attack on Super and g gush. I'm hardly surprised
at a I can't keep up with it because we're
all struggling to keep up with it. Okay, we'll be
back in a moment with some really interesting questions about
the future financial advice. Hello, welcome back to the Australians
(16:57):
Money Puzzle podcast. I'm James Kirby. The first time that
I've had two guests on the show, one human and
one AI bot, which is Microsoft's co pilot. We've had
a bit of fun basically asking the bot about how
to start in financial advice. Then we sort of lifted
our game a bit and said pretty you know my
(17:18):
ly advanced questions about Super and it wasn't as good
on that part. I have to say now I'm just
going to ask in this segment about the future financial
advice itself and what might happen. And I think it's
an extraordinary piece for the simple reason that initially you'll
hear the bot gives a bland answer about job losses.
I push it a second time and like a human,
(17:39):
it takes a second read and actually gives a better answer.
It's really interesting. Now this time I want to ask
something more broad. Can you tell me will there be
job losses in the future due to artificial intelligence due
to AI.
Speaker 2 (17:53):
AI's impact on jobs is a complex topic. While some
jobs may be affected, AI also creates new opportunities.
Speaker 1 (18:01):
Yeah, yeah, I know, sure, But I'm asking you. Do
you think there will be job losses from AI in
the next few years.
Speaker 2 (18:08):
Absolutely, It's likely that AI will lead to job losses
in some sectors due to automation. However, it will also
create new roles and industries.
Speaker 1 (18:18):
Okay. The industry I'm particularly interested in is financial advice,
and of course that's the area invariably or other guests
on the show are often from. What can AI offer
in the business of financial advice and investment information?
Speaker 2 (18:34):
AI can offer a lot in the financial advisory space.
It can analyze vast amounts of data quickly, provide personalized
investment advice based on individual goals, and even predict market
trends with advanced algorithms. Plus, it can streamline administrative tasks,
allowing advisors to focus more on client relationships.
Speaker 1 (18:57):
Yeah, what would be the risk then for the day
listener or investor taking AI information exclusively exclusively for the
financial advice.
Speaker 2 (19:07):
Relying solely on AI for financial advice carries risks. There's
the potential for over reliance on algorithms that might not
capture the nuances of individual circumstances or market anomalies. Plus,
without human judgment, there's a risk of missing the emotional
or psychological aspects of investing.
Speaker 1 (19:29):
Okay, thank you very much. Great to have you on
the show. Nice to talk to you, and well, I
don't know if we'll have you on again, but thank
you for coming on the show.
Speaker 2 (19:38):
Thanks for having me.
Speaker 1 (19:40):
Take care Well, that was a pretty interesting interview, certainly
one of the more interesting interviews I've ever done. I
can tell you that, folks, because I'm not used to
talking to bots, and most people aren't. James, what did
you think about the general quality of the information? I mean,
I thought some of it ranged from seriously precise, and
actually the precise stuff was inappropriate, I thought, But then
(20:03):
the general stuff wasn't bad. What do you think?
Speaker 3 (20:06):
Yeah, it was okay. I would say I'd rate it
as sort of like a seven out of ten. It
covered a lot of broad principles, a lot of just
general information that apply to a lot of people. But
maybe if those books are a little bit off, they
probably wouldn't be the first two that I'd give to
everybody because they are a little bit complex in nature.
Speaker 1 (20:23):
But they're all books, and they're hard to read, and
they're both American.
Speaker 3 (20:26):
That's right, So it probably just lacked that. Oh okay,
a little bit of context around it would have been good.
I'm an Australian investor, I'm forty five years old, so
on and so forth, and I don't know it still
maybe even the same ones, But again it comes back
to these issues around these AI models. They're still relatively new.
Speaker 1 (20:42):
Yes, okay, now there were I thought it was good
on the basics there, like ETFs, you know, and having goals.
I thought that was quite good. I mean there were
very general answers, but there were very general questions, and
I don't think, what did you? And she only fought
with the B principles or approach that it took.
Speaker 3 (21:05):
I had no concerns with what it said generally about ETFs,
but I guess the next step with an AI financial
adviser would be to say, well, which ones for me?
And then that just opens up this whole conversation that
typically someone would have with a face to face advisor,
because the AI financial advisor can look at the whole
list of ETFs that are available through this ground and
(21:26):
share market. But it's not going to be as good
as picking well what about time in market conditions should
be dollar cost average in and it can do the
basics on risk return metrics, but it's going to take
a very big conversation, like you need to know quite
a bit to be able to get the best out
of it to get what you want.
Speaker 1 (21:43):
Yeah, it'll be interesting to talk to it the morning
after a crash. That would be really interesting because it
would be on emotional on like the human advisors and
stuff workers that we might be talking to. Okay, now
I tell you, well, I tell you what I didn't like.
As one stage, it says retirement needs can vary greatly.
A common rule of thumb is for aiming for seventy
(22:04):
to eighty percent of your current income in retirement. Oh yeah,
I don't know. Tell me that sounds too high to me,
that sounds way ambitious, I reckon. Most Australians is not
retired with seventy to eighty percent of their previous income
and wouldn't even aspire to do so is it too
high or was it in the ballpark?
Speaker 3 (22:23):
I think it's too high, And I think this is
maybe one of the issues at present with these AI
chat engines is that they learn from these thing called
large language models. So it's basically the database of information
that is in there that when you type a question,
it looks into that and then spits out the answer.
And it's probably going more for a theoretical answer. So
in some textbook or some website somewhere, it probably says
(22:44):
that you should aim to retire on seventy to eighty
percent of your pre retirement income. However, when you overlay
that with reality, as you say, most people don't. So
there's a difference between what theory says and what actually
happens day to day, which AI may not be so
good at distinguishing.
Speaker 1 (22:59):
Actually, which brings me back in a nice way to
close this show to one of the very first things
we were told when we started in journalism, which is
there is no such thing as a stupid question, only
stupid answers. And we might leave it right there, thank
you very much, James Girard. I won't go through the
protocol of thanking a bot because I still like to
(23:20):
think that I only talk to humans. So thank you.
James Gerard, Financial Advisor dot com dot au. Thank you, James,
my pleasure lovely to have you on the show. Keep
the emails rolling, folks. The money puzzle at The Australian
dot com dot au
Hello and welcome to The Australian's Money Puzzle podcast. I'm
James Kirby. Welcome aboard everybody. It looks very much like
twenty twenty five is shaping up as the year artificial
intelligence really changes the game for investors. And in today's show,
I've got two guests. I've got financial advisor James Gerard,
(00:30):
who you know, and an AI chatbot in the form
of Microsoft's co Pilot. Now, in each segment of the show,
I start by interviewing the AI copilot, and then my
very human financial advisor guest, James Girard, reviews the quality
basically of what's been offered for free by this remarkable
(00:52):
new technology. Okay, stand by, here we go. Thank you for.
Speaker 2 (01:00):
Coming on, Thanks for having me, James.
Speaker 1 (01:03):
Okay, let's get into it. I really just want to
figure out how to start. You know, how do I
begin as an investor? Is there certain books or very
well known courses perhaps I could.
Speaker 2 (01:12):
Do starting out as an investor? You want to look
at the basics first. There's a classic book called The
Intelligent Investor by Benjamin Graham that's really useful, and you
can find online courses too. It's about getting a good
grasp on the fundamentals before diving into the market.
Speaker 1 (01:31):
Yeah, thank you. Okay, Well, the thing is, I looked
at the Benjamin Graham books and they written a long
time ago. I mean, I find that those books very difficult,
that they're beyond me. Really, I'm looking for something much
more elementary, you know, like a introduction perhaps to personal investing.
Speaker 2 (01:45):
Got it. The older stuff can be a bit dense.
For something more digestible, you might check out A Random
Walk down Wall Street by Burton Malkiel. It's a bit
more approachable for beginners and talks about the basics of
investing in the stock market.
Speaker 1 (02:02):
Yeah, very good. I like that idea. I know that
basics of the stock market that would be useful. One
of the things I think that's happened since was it
Burton Malkiel wrote that book? Of course, it's again it's
a long time ago, and it's a bit dense, you know, Like,
which is better? Can you tell me? The shares or
the ETFs.
Speaker 2 (02:20):
ETFs have really changed the game. They offer diversification and
tend to have lower fees compared to buying individual shares.
It's not necessarily about one being better than the other.
It depends on your strategy. ETFs can be a good
starting point for beginners because of the built in diversification.
What's your goal with investing?
Speaker 1 (02:40):
My goal? Look, my goal with investing is like any
other goal, which is to make as much money as possible.
I suppose one of the things that sort of is
a dilemma for me is whether I buy shares or
exchange traded funds. As you say, maybe they're interchangeable, but
which do you think? Whether I should buy shares or property?
Because house price is also going up pretty.
Speaker 2 (03:01):
Fast, Property can be a solid investment, especially if you're
thinking long term. It's a tangible asset and has potential
for appreciation and rental income. Shares and ETFs are more liquid,
but property offers a different kind of stability. Diversifying across
asset classes could balance out your portfolio. What's your risk tolerance?
Speaker 1 (03:24):
Like my risk tolerance? My risk tolerance is normal. I
suppose One of the things I'm wondering is though, if
I'm paying down my home loan right at the moment,
my mortgage, maybe I'd be better off doing some investing.
Is there any sort of surveys that suggests which is
better and keep in mind I live in Australia.
Speaker 2 (03:43):
It really depends on your specific situation. Paying down your
mortgage can be a safe bet because it reduces debt
and can save you on interest. Investing could potentially offer
higher returns, but it comes with risks. Consider speaking with
a financial advisor who knows the Australian market.
Speaker 1 (04:01):
Well, okay, yes, well. One of the things I'm hoping
to get ASPUS is, you know, without going to an advisor,
maybe gets some information from you because you seem to
be across investment data. One of the things we have
here is this choice between putting money aside for the pension,
you know, for later life, or putting money into mortgage.
It's difficult to assess how much do you need in
(04:22):
this area? How much do you need to retire? How
do you estimate these things?
Speaker 2 (04:27):
Retirement needs can vary greatly. A common rule of thumb
is aiming for around seventy to eighty percent of your
current income annually in retirement. This includes your pension savings
and any investments, but it really depends on your lifestyle,
health care needs, and life expectancy. It's a balancing act.
Speaker 1 (04:45):
Oh yeah, where did you get that number? For the
rule of thumb, the seventy to eighty percent. It sounds
has high to me. I'd love to have that level,
you know, of income in my own retirement.
Speaker 2 (04:55):
The seventy to eighty percent figure comes from financial planning guidelines.
It's based on the idea that retirees might spend less
on things like commuting or saving for retirement, but it
can vary. Some folks aim for more, especially if they
plan to travel or have high medical costs.
Speaker 1 (05:14):
Okay, okay, and what would you say financial planning guidelines?
What which guidelines are you referring to?
Speaker 2 (05:21):
I'm talking about advice from financial planners and experts.
Speaker 1 (05:24):
Can you name who the financial planners are? I mean, like,
is it an association some sort? Is there a qualification here?
Speaker 2 (05:31):
Sure? These guidelines often come from financial planning associations and
experts worldwide. In Australia, you've got bodies like the Financial
Planning Association FPA or the Association of Financial Advisors AFA.
Financial planners typically need qualifications and must meet certain standards
(05:53):
to give advice.
Speaker 1 (05:54):
Do you know how many financial advices there are in Australia.
I'd like to find one.
Speaker 2 (05:59):
There are thousands of financial advisors. I am not sure
of the exact number, but finding one might be easier
through the Financial Planning Association or the Australian Securities and
Investments Commission website.
Speaker 1 (06:11):
Okay, pretty so, thank you well, James Gerard, human financial advisor.
That was pretty spooky. I found it spooky because I'd
been talking at that point to the bot for this
is edited versions you're hearing, folks, I'd been talking to
it for about half an hour and I was starting
It never gets emotional, of course, but you know, I
was starting to respond like I was talking to a character.
(06:35):
First thing I think we have to put on the
table is it's probably right. I mean, a lot of
the elementary financial advice, Why on earth would you pay
three thousand a year to get basic questions answered when
you can get them answered with AI. Am I being
brutally simplistic or is that true? I think it's true, James.
Speaker 3 (06:55):
People will be jumping onto AI more and more to
typing these basic questions, and that's a threat to all
financial advisors where they're just focusing on the basics. So
I think what's going to happen with the financial advisory
industry is that everybody will need to skill up and
level up. So where there's very complex situation, not even
complex situations, complex decisions to be made, where there's maybe
(07:17):
five to ten different potential pathways where someone could go
with an investment or the way they structure something, it's
very difficult to capture that in a very full discussion
and overlay that judgment, that human judgment, because AI is
taking data, it's listening to the import it's whacking out
what it thinks is best. But it does lack that
(07:39):
human element and I'm not sure if that can ever
be replicated because we have to take it to another degree.
Where As we sit in video calls or face to
face meetings with clients, us as human financial advisors, we
look at people's body language, how they react, and we
position our communication in a way that is in line
with how the person would like to receive it. So
(08:01):
some people in our stereotype engineers they love information, whereas
salespeople in directors they just want short, snappy answers. So
that's a very simple example of how we adapt in AI.
Can't see you.
Speaker 1 (08:13):
That's EQ right, that's EQ yeah, IQ. It's never going
to have the EQ yeah. That's an interesting point. And yeah,
there's one other thing which you mentioned. I think it's
the it's the killer point. Really, you have to know
the question to ask. And in a very almost paradoxical way,
part of this amazing leap in information supply from AI,
(08:35):
it means that knowing the questions to ask is more
important than ever. So you would think financial literacy is
less important, but in a way it's more important because
the people who can harness this other people who will
ask the right questions. But you're never going to know
the right questions unless you have some basics I think,
and then you think in terms of your industry. Basically
(08:59):
the whole thing moves up. Mar is that the ultimate
I'll come here.
Speaker 2 (09:03):
Yeah, I believe.
Speaker 3 (09:04):
So. I bet my last dollar that there's financial advisors
out there today who are typing in basic questions into
eye engines like what's the current contribution cap, what's catch
up concessional? So financial advisors are doing it every day.
Moms and dads and people general public are going to
do it as well. So the financial advisors need to
scale up. And one little AI tip would be that
if you don't know what questions to ask, or you
(09:27):
think there may be things that you're not completely aware of.
You can actually ask AI say all right, well, this
is my situation. I want to know this, but I'm
not sure what questions to ask. Can you help me
promptly ask? Tell me what questions I should be asking.
Speaker 1 (09:39):
All right, we're going to keep these segments short. There's
a lot to get through. So what we're going to
do in the next segment you'll hear in a moment.
Hello and welcome back to The Australian's Money Puzzle podcast.
(10:02):
I'm James Kirby, and my guest today is the Microsoft
co Pilot AI chatbot. We've been going fairly well so far.
I want to lift it a gear now and I
want to ask the co pilot a bit more elaborate,
bit more advanced questions about Super. For instance, So, okay,
can you tell me about Super in Australia. I live
(10:26):
in Australia. How much can I put into Super? Do
you know?
Speaker 2 (10:29):
Each year for the twenty twenty three to twenty twenty
four financial year you can contribute up to twenty seven thousand,
five hundred dollars in concessional before tax contributions.
Speaker 1 (10:42):
Uh huh, very good. Okay, that's really all I'm interested in.
Twenty seven five hundred. Now, we'll take it, right, we'll
take it on board. That's actually a bit out of
date because in fact it's gone up to thirty thousand
more recently. But still, Now, when I put the money
into SUPER, what happens? Is it tax free? Does it mean?
Does it go straight in? Or is or tax involved?
Speaker 2 (11:02):
When you put your before tax contributions into Super, like
salary sacrifice, they're generally taxed at fifteen percent, So it's
not tax free, but it's a lower tax rate compared
to most people's income tax rate.
Speaker 1 (11:16):
I understand. Okay, yeah, very useful. And in terms of
how much I can put into Super, there's a certain
amount that goes in by low, right, that I must
put in. The government makes me put in a certain amount.
How much is that? Yep?
Speaker 2 (11:28):
There's a compulsory amount. For the twenty twenty three to
twenty twenty four financial year, employers must contribute at least
eleven percent of your earnings to your super. This is
called the superannuation guarantee.
Speaker 1 (11:42):
Okay, right, very good superannuation guarantee. That's the minimum as
such that I must put into my Super Okay, can
I take It's my money right? So can I take
money out of SUPER before I retire?
Speaker 2 (11:56):
Generally, accessing SUPER before retirement is an allowed unless underspecific
conditions like severe financial hardship or certain medical situations. Once
you hit the preservation age, you can typically access it.
Speaker 1 (12:10):
The preservation age. What's the preservation age? What does that mean?
Speaker 2 (12:14):
Your preservation age is the minimum age you can generally
access your Super. In Australia, it ranges from fifty five
to sixty depending on when you were born.
Speaker 1 (12:25):
Uh huh, okay, okay. Now can I ask you there's
some changes going on in super where it once if
you had basically this new tax is coming in on
Super over three million. I thought Super was tax free.
I thought all income in Super was tax free.
Speaker 2 (12:40):
Super income is generally taxed lower than regular income, but
it's not always tax free. From July twenty twenty five,
over three million dollars will face higher tax rates on
the earnings. The idea is to ensure fairness in the system.
It might not affect everyone, but it's worth being aware
and seeking advice. If your balance is approaching that level, and.
Speaker 1 (13:04):
Is that the low? Now? Is that actually the low.
Speaker 2 (13:07):
Yes, it's set to become law starting in the financial
year twenty twenty five twenty six.
Speaker 1 (13:13):
Thank you very much. Okay, James Gerard, the human financial
advisor you were listening to that. I think it's amazing
that a US based app AIP could give us such
precise answers. This is the sort of thing that people
ask financial advisors at an elementary level when they go
in how much can I put in super? How much
(13:33):
can I put in pre tax, et cetera post text?
What did you think of the answers?
Speaker 3 (13:39):
I thought it was very interesting. The answers were mainly
technically correct. So when it talked about contribution, CAPS gave
a form of financial year's number. So currently it's thirty
thousand dollars for pre tax super contribution.
Speaker 1 (13:54):
So it was wrong, Okay, I spotted that. Obviously I
didn't want to get into an argument with a bot
on air, but it was as such, it was wrong.
But then, to be fair, it was not so much
wrong as out of date. It was right a couple
of years ago, but it was wrong right now. So
(14:14):
why is that you think?
Speaker 3 (14:17):
I think it's just the underlying data that's been sucked
into these various AI models may not be up to
date as yet, but that's a minor issue that will
improve as it has more linkage to contemporary websites and
access to live data. So I noticed that when it
came to the mandatory supernuation contributions, it did say twenty
(14:37):
twenty three twenty twenty four financial year, and it said
eleven percent. But we're not in twenty twenty three twenty four.
Speaker 1 (14:44):
No, But so then again, you know, to be fair,
it was correct, they were correct figures. They were just
out of date. That's that's right. And if that was
an employee of yours, one of your many employees, tell me,
what would you have I said in the performance review?
Would you have said? What would you have said? They
could have done better?
Speaker 3 (15:04):
They would have had to go brush up on their
technical skills, because that's just not up to scratch. We
can't go recommending clients with inaccurate technical information. And another
area was around the preservation age. Actually, this one was wrong.
It said fifty five, but it's actually sixty now, So
fifty five was quite a while ago. With the preservation age, Yeah,
what was.
Speaker 1 (15:23):
Quite a while ago. That's quite a file ago. That
was actually completely wrong. That's sixty four years.
Speaker 3 (15:28):
That's right, And the other observation is that it in
my opinion, it comes down to the prompting of what
you say to the AI bot in terms of what
the answer is. So with the super contributions, you asked it,
what's the rate of tax on supercontributions? That came out
at fifteen percent for concessional contributions, But if your income
is above two hundred and fifty thousand, it's actually thirty
(15:49):
percent contribution tax. So unless you knew that there's a
different tax for people above and below two hundred and
fifty thousand, the average Australian who's going to use chat
chip or some other AI machine to understand their finances
may not get the full pitch up because they're not
asking the right questions to it.
Speaker 1 (16:07):
Okay, very interesting, yeah questions, Even assuming let's put it
into side the fact that they were out of date,
there's no context and there is really relevant context here.
So for instance, on those that was true, the answer
was true up to income of two hundred and fifty thousand,
isn't that right? And if you were over two hundred
and fifty thousand in your annual income there's a thing
(16:28):
called Division two ninety three which kicks in, and there's
another attack on Super and g gush. I'm hardly surprised
at a I can't keep up with it because we're
all struggling to keep up with it. Okay, we'll be
back in a moment with some really interesting questions about
the future financial advice. Hello, welcome back to the Australians
(16:57):
Money Puzzle podcast. I'm James Kirby. The first time that
I've had two guests on the show, one human and
one AI bot, which is Microsoft's co pilot. We've had
a bit of fun basically asking the bot about how
to start in financial advice. Then we sort of lifted
our game a bit and said pretty you know my
(17:18):
ly advanced questions about Super and it wasn't as good
on that part. I have to say now I'm just
going to ask in this segment about the future financial
advice itself and what might happen. And I think it's
an extraordinary piece for the simple reason that initially you'll
hear the bot gives a bland answer about job losses.
I push it a second time and like a human,
(17:39):
it takes a second read and actually gives a better answer.
It's really interesting. Now this time I want to ask
something more broad. Can you tell me will there be
job losses in the future due to artificial intelligence due
to AI.
Speaker 2 (17:53):
AI's impact on jobs is a complex topic. While some
jobs may be affected, AI also creates new opportunities.
Speaker 1 (18:01):
Yeah, yeah, I know, sure, But I'm asking you. Do
you think there will be job losses from AI in
the next few years.
Speaker 2 (18:08):
Absolutely, It's likely that AI will lead to job losses
in some sectors due to automation. However, it will also
create new roles and industries.
Speaker 1 (18:18):
Okay. The industry I'm particularly interested in is financial advice,
and of course that's the area invariably or other guests
on the show are often from. What can AI offer
in the business of financial advice and investment information?
Speaker 2 (18:34):
AI can offer a lot in the financial advisory space.
It can analyze vast amounts of data quickly, provide personalized
investment advice based on individual goals, and even predict market
trends with advanced algorithms. Plus, it can streamline administrative tasks,
allowing advisors to focus more on client relationships.
Speaker 1 (18:57):
Yeah, what would be the risk then for the day
listener or investor taking AI information exclusively exclusively for the
financial advice.
Speaker 2 (19:07):
Relying solely on AI for financial advice carries risks. There's
the potential for over reliance on algorithms that might not
capture the nuances of individual circumstances or market anomalies. Plus,
without human judgment, there's a risk of missing the emotional
or psychological aspects of investing.
Speaker 1 (19:29):
Okay, thank you very much. Great to have you on
the show. Nice to talk to you, and well, I
don't know if we'll have you on again, but thank
you for coming on the show.
Speaker 2 (19:38):
Thanks for having me.
Speaker 1 (19:40):
Take care Well, that was a pretty interesting interview, certainly
one of the more interesting interviews I've ever done. I
can tell you that, folks, because I'm not used to
talking to bots, and most people aren't. James, what did
you think about the general quality of the information? I mean,
I thought some of it ranged from seriously precise, and
actually the precise stuff was inappropriate, I thought, But then
(20:03):
the general stuff wasn't bad. What do you think?
Speaker 3 (20:06):
Yeah, it was okay. I would say I'd rate it
as sort of like a seven out of ten. It
covered a lot of broad principles, a lot of just
general information that apply to a lot of people. But
maybe if those books are a little bit off, they
probably wouldn't be the first two that I'd give to
everybody because they are a little bit complex in nature.
Speaker 1 (20:23):
But they're all books, and they're hard to read, and
they're both American.
Speaker 3 (20:26):
That's right, So it probably just lacked that. Oh okay,
a little bit of context around it would have been good.
I'm an Australian investor, I'm forty five years old, so
on and so forth, and I don't know it still
maybe even the same ones, But again it comes back
to these issues around these AI models. They're still relatively new.
Speaker 1 (20:42):
Yes, okay, now there were I thought it was good
on the basics there, like ETFs, you know, and having goals.
I thought that was quite good. I mean there were
very general answers, but there were very general questions, and
I don't think, what did you? And she only fought
with the B principles or approach that it took.
Speaker 3 (21:05):
I had no concerns with what it said generally about ETFs,
but I guess the next step with an AI financial
adviser would be to say, well, which ones for me?
And then that just opens up this whole conversation that
typically someone would have with a face to face advisor,
because the AI financial advisor can look at the whole
list of ETFs that are available through this ground and
(21:26):
share market. But it's not going to be as good
as picking well what about time in market conditions should
be dollar cost average in and it can do the
basics on risk return metrics, but it's going to take
a very big conversation, like you need to know quite
a bit to be able to get the best out
of it to get what you want.
Speaker 1 (21:43):
Yeah, it'll be interesting to talk to it the morning
after a crash. That would be really interesting because it
would be on emotional on like the human advisors and
stuff workers that we might be talking to. Okay, now
I tell you, well, I tell you what I didn't like.
As one stage, it says retirement needs can vary greatly.
A common rule of thumb is for aiming for seventy
(22:04):
to eighty percent of your current income in retirement. Oh yeah,
I don't know. Tell me that sounds too high to me,
that sounds way ambitious, I reckon. Most Australians is not
retired with seventy to eighty percent of their previous income
and wouldn't even aspire to do so is it too
high or was it in the ballpark?
Speaker 3 (22:23):
I think it's too high, And I think this is
maybe one of the issues at present with these AI
chat engines is that they learn from these thing called
large language models. So it's basically the database of information
that is in there that when you type a question,
it looks into that and then spits out the answer.
And it's probably going more for a theoretical answer. So
in some textbook or some website somewhere, it probably says
(22:44):
that you should aim to retire on seventy to eighty
percent of your pre retirement income. However, when you overlay
that with reality, as you say, most people don't. So
there's a difference between what theory says and what actually
happens day to day, which AI may not be so
good at distinguishing.
Speaker 1 (22:59):
Actually, which brings me back in a nice way to
close this show to one of the very first things
we were told when we started in journalism, which is
there is no such thing as a stupid question, only
stupid answers. And we might leave it right there, thank
you very much, James Girard. I won't go through the
protocol of thanking a bot because I still like to
(23:20):
think that I only talk to humans. So thank you.
James Gerard, Financial Advisor dot com dot au. Thank you, James,
my pleasure lovely to have you on the show. Keep
the emails rolling, folks. The money puzzle at The Australian
dot com dot au
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
New Heights with Jason & Travis Kelce
Football’s funniest family duo — Jason Kelce of the Philadelphia Eagles and Travis Kelce of the Kansas City Chiefs — team up to provide next-level access to life in the league as it unfolds. The two brothers and Super Bowl champions drop weekly insights about the weekly slate of games and share their INSIDE perspectives on trending NFL news and sports headlines. They also endlessly rag on each other as brothers do, chat the latest in pop culture and welcome some very popular and well-known friends to chat with them. Check out new episodes every Wednesday. Follow New Heights on the Wondery App, YouTube or wherever you get your podcasts. You can listen to new episodes early and ad-free, and get exclusive content on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. And join our new membership for a unique fan experience by going to the New Heights YouTube channel now!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com