Gut feeling to guided intelligence: How AI is transforming financial planning

Many people still plan their finances based on gut instinct, rule-of-thumb advice, or what their friend, neighbour, or uncle recommends — the classic “Sharma ji told me” approach. While this may have worked for a simpler world, today’s financial reality is anything but simple.

Inflation is unpredictable. Life goals are diverse and evolving. Investment products are growing in complexity. And yet, many of us continue to make major financial decisions manually, emotionally, and sometimes without enough information.

However, times are changing. And that too, very quickly, thanks to AI.

With its ability to process vast amounts of data, identify patterns, and learn from outcomes, AI is poised to revolutionise financial planning. It's enabling personalised strategies and automating complex tasks, making financial guidance accessible to a much broader audience.

Why financial planning needs AI now more than ever

Financial planning today is far more complex than simply setting aside a fixed amount each month. It requires balancing a wide range of moving parts—short-term expenses alongside long-term goals, investments and insurance with tax efficiency, and the unpredictable nature of income growth, inflation, market volatility, and life events. Life itself is dynamic: your priorities shift, careers change, families expand, and health needs evolve. In such a world, shouldn’t your financial plan evolve as well? This is precisely where Artificial Intelligence (AI) can become a transformative ally—if used thoughtfully.

Where AI make the biggest difference

Goal Discovery – How much will it take?

Whether you’re planning for your child’s college, your own retirement, a new home, or a sabbatical — the first question is always “How much do I need?”

This is where AI steps in with real data instead of vague assumptions. It analyses projected costs specific to your goal, factors in inflation rates relevant to different sectors—such as healthcare, education, or real estate—and takes into account your personal timeline, income, and risk profile.

Rather than offering generic advice like “Start investing ₹5,000/month and hope for the best,” AI tells you - “You’ll need ₹1.2 crore in 18 years. Start with ₹8,000/month and increase it by 10% each year.”

Personalised pick – Where to invest?

No two people are the same. So why should their financial plan be? A 28-year-old software engineer and a 52-year-old small business owner have completely different investment needs.

AI recognises these differences and quickly personalises a financial strategy accordingly. It assesses your risk tolerance, evaluates your income, expenses, and liquidity requirements, and then matches the most suitable investment options to your specific goals.

The result isn’t a generic, off-the-shelf portfolio, but a tailored roadmap. One-size-fits-all doesn’t work with AI — it’s all about tailored solutions, just like custom-fit clothing designed to suit you perfectly.

Rebalancing – What to do if the market falls?

Often investors ask – What will happen if market falls, remember, markets behave as usual unless there’s any surprise element.

Markets fluctuate, but your goals don’t. Whether markets are bullish or bearish, your retirement date or your child’s college admission won’t wait.

That’s where AI steps in to keep your plan on course. It can suggest timely shifts from equity to debt as you approach your goal, nudge you when you're either overexposed to risk or under-invested, and help protect your corpus from sudden shocks—much like an autopilot system that makes subtle corrections to keep a flight safely on track.

Alerts – Reminders

Let’s be honest — life gets busy. We all forget. AI acts like your financial assistant, sending timely alerts such as, “It’s time to top up your SIP after receiving a bonus,” or “You’re falling short of your target—consider increasing your contribution.”

It keeps your plan active and responsive, even when you’re not paying attention.

The best of both worlds: Human + AI

AI doesn't eliminate the need for human judgment. In fact, it complements it. While AI contributes objectivity, predictive insights, and real-time tracking, humans provide empathy, context, and long-term thinking. This powerful combination of technological and human strengths creates a strong partnership that leads to better financial decisions in the long run.

The author is co-founder and CEO of EduFund. Views are personal.