Recently, we’ve been inundated with the idea that we are on the frontier of an intelligence revolution. And yet, it’s never felt harder to get a straightforward answer, especially when you seek it online.
Today’s article is for any business owner who’s been flooded with endless generative AI tools, online calculators, or conflicting information about business planning, and feels overwhelmed and unfulfilled by the incorrect non-answers that they tend to provide.
You Cannot Trust Generative AI
Generative AI is possibly the most overhyped technology of all time. -Ed Zitron
There is perhaps no greater threat to thoughtful, considered reasoning than generative AI.
Whether it’s a popular large language model like ChatGPT or Claude, or AI plug-ins that every company seems compelled to stuff into as many nooks of their products as possible, we’ve all been told ad nauseum that this is the future.
But when the initial parlor trick of entering a prompt and having a so-called answer spat out in seconds wears off, three things become abundantly clear about generative AI:
- It does not know anything.
- It has no experience with the thing you are asking it about.
- It will flat-out make things up.
Unlike an advisor, a generative AI program cannot consider your unique experience or the nuances around it, because it does not intuitively know anything. All it does is predict the word that is most likely to come next in a sequence based on training data fed into it, not unlike your phone’s predictive text function. It cannot reason, cannot question assumptions, and cannot provide new insights—all because it literally does not know anything.
Even worse, a study published in the journal NATURE argued that there’s evidence that people who tend to trust AI answers also tend to be less effective in decision-making.
AI Is a Sycophant
Many AI programs are overly ingratiating in their outputs. Whereas an advisor can help you confront mistakes in your planning or question your assumptions, generative AI will lean toward telling you that you are correct, even if the information you’re providing includes blind spots, false assumptions, or is wrong itself.
It can’t really correct you because it has no experience with what you’re telling it. While this route might seem to be easier or have less friction, it can also expose you to unintended risks, such as pursuing financial strategies that are overly risky or inapplicable to your situation.
AI Will Make Things Up
Generative AI will hallucinate, which means it will give you a plausible-but-wrong answer to your question with unwavering confidence. This goes beyond programs being unable to correctly count the number of Rs in the word strawberry. It’s been especially noticeable in the legal sphere, where a lawyer submits a filing that includes completely fictitious case law generated by an AI, leading to cases being dismissed, legal fines, and more.
Worse still, these hallucinations are mathematically inevitable, which means there is no way whatsoever to prevent hallucinations from happening.
While there are arguments to be made that the user of the AI is ultimately responsible for the outputs, ask yourself: “If I’m supposed to check this work, but I don’t have the relevant expertise to properly check it, how is the answer this program provides helpful?”
Generative AI has been boosted as a revolution in intelligence and efficiency, but only if you are willing to constantly correct its mistakes, only if you prompt it just right, and only if you have a deep knowledge of the topic about which you’re asking it.
When it comes to planning for your future, that’s a ton of extra work, and getting it wrong can have dire consequences. And if you’ve ever heard the argument, “Generative AI democratizes expertise,” ask yourself again, “Would I want just ANYONE helping me plan my financial, professional, and personal future?”
AI Will Never be an Advisor
The shortcomings that generative AI programs create in planning a successful business future could fill a book. But it boils down to a very simple question: Do you want someone with proven expertise, depth of knowledge, and a duty to be accountable helping you plan? Or do you want a faceless program that has no knowledge, no experience, and no accountability—that consistently gets simple facts wrong but does so confidently—to do it?
In short, generative AI could be a great way to plan if you’re trying to create a plan that is wrong for you as quickly as possible.
If you’re frustrated by the never-ending shoehorning of AI into your life, constantly overwhelmed by its presence, and underwhelmed by its outputs, you’re not alone.
Dedicated advisors—those with tangible knowledge, expertise, and accountability—can help you find the answers you need and implement strategies properly. They can help you uncover issues that you didn’t even know existed, such as how to adjust your planning if your chosen successor doesn’t have what it takes to lead the company. They can help you confront the emotional aspects of planning that often boil under the surface and require an emotional intelligence that does not, cannot, and never will exist in an AI.
Calculators Can Be a Starting Point
Online calculators can be a quick and dirty way to give you an idea for what you may need to do to pursue a successful retirement. For example, you may find an online calculator that tells you how much money you will need in retirement to never have to go back to work again.
However, that online calculator likely will not be able to tell you how to build that wealth. It also cannot question your assumptions about your current financial state.
For instance, a common mistake that business owners make when approaching their retirement is thinking that they will spend less money in retirement than they do when they’re working. In fact, many business owners find themselves spending more than they expected in retirement.
In this scenario, feeding incorrect data into an online calculator can start you down a path toward failure in retirement planning. An advisor will likely have a wealth of experience to help you avoid these early-stage errors.
Another common mistake business owners make is assuming that they will die before their retirement savings run out. Underestimating how long you will live after retirement can have enormous implications on your planning. An online calculator is unlikely to be able to question your assumptions about how long you’ll live after retirement.
On the other hand, advisors can question these assumptions, help you find holes in your logic, and help you better prepare for the unexpected than an online calculator.
Be Careful With Calculators
Online calculators can be a good starting point for a discussion with your advisors, but be cautious in how much stock you put in its outputs.
Consider one last example: Say that an online calculator told you that based on your current situation, you would need $10 million to retire with financial security. But then, a few years into your planning, something unexpected happens: You’re diagnosed with an illness, you experience a divorce, or one of your key employees suddenly leaves. The online calculator will not be able to help you adjust to these unexpected events.
An advisor would be better positioned to help you pivot, refocus, and continue pursuing your goals more effectively than an online calculator.
Software Has No Emotional Intelligence
Owning a business is an inherently emotional enterprise. You pour your heart, soul, blood, sweat, and tears into building something that you’re proud of, that can support you and the ones you care about financially, and that benefits the community around you.
No software, no matter how much money is poured into it or how much hype is behind it, can consider the emotional aspects of running, growing, and eventually leaving a business.
Wrangling the emotional side of business planning and retirement planning is still best handled by expert advisors. Their knowledge and experience can go a long way in assuaging business owners who face difficult business decisions on their path to a successful business exit.
Whether that means helping you address family infighting over the future of the business, preventing you from tainting the marketplace by putting your business on the market before it’s ready, or helping you find and implement a good next-level management team, an Advisor Team can provide focused and tailored strategies that are both time and experience tested.
You Don’t Need to Be a Luddite
Used correctly, technology can give you insights on what it may take to pursue a successful business plan and business exit. But you must take caution with how much you are willing to trust technologies that do not have your best interest in mind, do not intuitively know anything about you, and have no duty to take accountability for the advice that they give you.
That last part is crucial and worth repeating: An advisor has a professional duty to take accountability. A generative AI software does not, and the companies producing them almost certainly will not take responsibility for its outputs.
Conclusion
Think about the last time you had to call customer service for anything. Think about how it felt to have to go through an automated system of pushing numbers over and over again to try and get the answer you’re looking for. If you’re like many people, you say, “I want to speak to a person” as soon as you can because the automated technology simply cannot give you the answer you’re looking for.
The same goes for planning for business growth and your eventual business exit. As you approach your inevitable exit, you have the choice of rolling the dice with automated technology that can rarely give you the answer you need or working with a team of people who have a duty to do what is in your best interest.
The stakes are simply too high to rely on technology alone. Human expertise continues to play a critical role in how business owners can successfully plan for their eventual business exit.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you have questions on this topic, we can help with more information or a referral to another experienced professional.