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AI v reality: How AI advice overload exposes the next generation of investors
On a recent episode of The Smart Property Investment Show, Finni Mortgage principal Eva Loisance and host Phil Tarrant discussed the increasing use of AI and social media to build portfolio strategy.
According to Loisance, the younger generation has been using different media to learn about investment processes and strategies.
“They have lots of bits of information coming from a lot of different places, and they are trying to put it together to see if it works for their situation,” Loisance said.
As a result, she said that Gen Z often had a broader knowledge base but not a deep understanding of the fundamentals, while the older generations had a deeper understanding of investment strategies and their processes.
One of the major misconceptions gained online was about borrowing power, with buyers often believing they could borrow more than the bank would actually lend them, according to Loisance.
“It’s really shocking when people declare their living expenses with us, and then we go and check the bank statement. People do not know how much they spend,” she said.
Loisance said that in the early stages of their property journey, buyers often lacked a full understanding of their financial position and the factors that determined their borrowing power.
In their pursuit of broadening their financial knowledge, she said that buyers were increasingly turning to AI tools to bridge the gap, but paying the price for not understanding the process.
“Borrowing capacity is actually very complex; it takes your lifestyle as a whole (into account),” she said.
While they may be receiving the right information based on what they supplied to AI tools like ChatGPT, Loisance said buyers often omit key information that plays a role in determining their borrowing power.
“That's why you cannot get a proper answer online, you need to talk to somebody.”
To gain a complete understanding of their borrowing capacity, Loisance said prospective buyers should consult a professional rather than attempt to determine it themselves.
In addition to social media, Loisance said that Gen Z were being influenced by their friends' property journeys, without understanding the differences in their financial positions and attempting strategies that were not suitable for them.
“That's where the problem is, when it’s like ‘well I saw this on TikTok and my friend did this and we did it too’,” she said.
With one in five Gen Zers using AI to make decisions about their financial future, host Phil Tarrant said buyers need to ensure they fact-check and cross-reference information.
“If you are relying on social media or on AI, just be aware that it may not be factual and you may be making investment decisions on information that is not serving your best interests,” Tarrant concluded.
Listen to the full episode here
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