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Investors using generalized, all-purpose AI platforms for retirement planning help may not even realize these tools' shortcomings.

Have you ever considered asking an artificial intelligence (AI)-powered assistant like Google's Gemini or Microsoft's Copilot for help allocating your retirement portfolio? If so, you wouldn't be the first. You may already be using AI to allocate your retirement savings without knowing it.

These tools are obviously powerful by virtue of being able to access much of the world's collective knowledge. A handful of brokerages and investment managers know this and have been providing such technology for some time now. They just don't tell clients that their stock picks are being powered by artificial intelligence because ... well, because the world's still not completely convinced that generalized AI-powered chat tools like OpenAI's ChatGPT or Gemini always get things right.

That's because the AI doesn't always get things right, by the way. Indeed, when it comes to retirement planning, all-encompassing platforms like the aforementioned Copilot or ChatGPT can sometimes be alarmingly problematic by missing key details about your specific situation.

With that as the backdrop, here's why you're better served by sticking with the AI tools built specifically to help you manage your retirement investments.

If you're a customer of brokerage firm Charles Schwab (SCHW 0.95%), then you've already been exposed to an AI-powered stock-picking tool. Unveiled in early 2022, this technology allows investors to narrow their investment choices down to a manageable handful based on the usual criteria like risk, growth, and valuation. But the tool also helps investors identify and capitalize on qualitative trends or themes.

It's not exactly a new idea. Investors have had access to theme-based stock suggestions for years now. Usually, it just seems like another criterion offered by a stock screener.

There's far more artificial intelligence being applied here than there seems to be on the surface. Much like Microsoft's Copilot and Google's Gemini, Schwab's tool uses AI "to find companies linked to those keywords and phrases, combing through millions of public documents, such as patents, clinical trials, and company filings." It very likely comes up with picks most investors would have otherwise never come across.

Perhaps more relevant to future or current retirees is Schwab's menu of so-called Intelligent Portfolios, which build and then update a portfolio pre-selected for your particular situation. What the company refers to as a robo-advisor doing this portfolio maintenance is actually a form of automated AI. Although these portfolios certainly don't outperform the broad market each and every quarter, they do offer less volatile, more consistent performances without requiring constant monitoring and management by investors.

Image source: Getty Images.

Mutual fund giant Fidelity also has its own robo-advisor tech, powering an automated investment service called Fidelity Go. Although it's not Fidelity's invention, the brokerage firm offers its customers access to Capitalize.ai, allowing users to turn the simplest of word-based instructions into a trading algorithm.

Investment management outfit BlackRock (BLK 0.56%) -- the name behind the iShares family of exchange-traded funds (ETFs) -- is another financial services name waist-deep in AI waters.

While most of the company's interest in AI has been to empower financial advisors via a revenue-bearing platform called Aladdin, it's not unaware of the potential of AI as a stock-picking tool. For instance, commenting specifically on retirement portfolios, BlackRock explains that "by analyzing vast datasets, including satellite imagery and labor mobility data, AI can extract early insights on economic activities across regions, which can be used to inform macro (e.g., regional) and micro (e.g., company level) tilts in our portfolios."

To this end, while it doesn't offer a Schwab-like robo-advisor to individual investors, BlackRock has never denied the fact that it's using AI to help guide its fund managers' investment choices. So, in a sense, some individual investors are directly benefiting from BlackRock's AI tech.

Some might argue that general-purpose AI chat platforms like ChatGPT and Gemini have come a long way since Schwab and Fidelity first launched their AI-powered stock-picking tools. Namely, they've become incredibly user-friendly.

And that's not incorrect.

But all-purpose AI platforms still aren't great self-service options for allocating your retirement savings even when you can convince a general AI assistant to help you do so. These platforms are seemingly aware that even they are not ideally suited to offer you a full-blown portfolio plan; as such, they don't always provide more than a broad allocation theory.

Not all AI is the same. Microsoft's Copilot and OpenAi's ChatGPT, and Google's Gemini are all large language model (or LLM) AI, meaning they rely on the collective wisdom created by the text available on billions and billions of web pages. By interpreting and integrating as much credible information available on the web as they can, these platforms can end up ignoring a nuance that might be uniquely important to you.

It's also worth adding that while LLMs can analyze numerical data, they're not built to deal with numbers. They often struggle when it comes to doing predictive numerical analysis. This, of course, is the kind of math retirees typically need done (and need done right).

The missing element? Context. Gemini or Copilot "understand" words largely based on the words appearing before or after them. With numbers though, these tools don't always understand what it is you're trying to accomplish or determine, or how to do it, particularly when you're giving these AI platforms instructions using words.

That's not the case with the portfolio-allocation tools offered by Schwab or Fidelity, or perhaps eventually by BlackRock. Their technology is built from the ground up to handle numbers and meet needs specific to investors. They may require more input from you on the front end, but they're far better suited to provide you with the solutions you need in the end.

These investor-oriented AI tools also do something important that most general AI-powered chatbots don't; they ask you questions that force you to think about what it is you ultimately want to accomplish. ChatGPT, Gemini, and Copilot don't ask any follow-up, clarifying questions. In fact, these tools don't even recognize that they should be asking more probing questions of investors using them.

Connect the dots. The additional information and investment of your time in the creation of a customized retirement portfolio will very likely lead to superior returns (relative to the risk you're taking) from your retirement fund. So, stick with the tools purpose-built to allocate a portfolio specifically for you. It's worth it even if they're not the easiest and most accessible option to use.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fools board of directors. Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Charles Schwab, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short June 2024 $65 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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Surprise: Artificial Intelligence (AI) Might Already Be Used to Allocate Your Retirement Savings - The Motley Fool