Artificial intelligence (AI) has become omnipresent in everyday life. And when it comes to financial matters, using AI tools can admittedly help find quick, basic answers to many questions.
But as Andrew Lo, finance professor and director of the Laboratory for Financial Engineering at the MIT Sloan School of Management, explained to CNBC, while AI has the "expertise" to manage money, it lacks fiduciary duty—the legal obligation to act in a client's best interest.
And that's a real issue.
“The problem that we have to solve is not whether AI has enough expertise. The answer right now is, clearly, AI has the [financial] expertise,” Lo told CNBC. “What they don’t have is that fiduciary duty. They don’t have the ability to suffer consequences if they make a mistake to the same degree that a human adviser does.”
So what does this mean for real estate investors using AI for property valuation or portfolio balancing, for instance?
AI for real estate investors: expertise but no fiduciary duty
Mohamed Yousuf, CEO and co-founder of Smart Workforce AI, a workforce intelligence platform, says that while AI is very good at analyzing data, it's important to recognize its limits, like the fact that it doesn't have legal or ethical responsibility to safeguard investors' interests.
“For real estate investors, this distinction is very important. Deciding how much a property is worth or whether to buy or sell isn't just about numbers. There are many personal choices attached, like the person's risk tolerance, timing, access to funds, long-term goals, etc.,” Yousuf says, adding that a thoughtful human can look at all these factors and make a decision that aligns with personal objectives.
“Relying completely on AI misses the judgment that real estate investment needs,” he says.
Several experts echo this sentiment, including Alex Blackwood, co-founder of mogul, a fractional real estate investing platform, who notes that using AI in this instance means you have to be incredibly careful about where the math ends and the responsibility begins.
"It can also 'hallucinate' and make up stats,” he says. “Without good assumptions and judgment, you can’t make good investments. That is why we believe trust and access remain the real moats in this industry."
Will AI ever replace financial advisers?
There's no question AI is reshaping the financial advising sector. Case in point, a Schwab Advisor Services study found that “AI adoption among independent registered investment advisors (RIAs) has more than doubled since 2023, with 63% now using AI tools in some capacity.”
But the shift from financial advisers merely integrating AI tools to seeing their profession become obsolete is a huge leap.
As Blackwood points out, financial advisers may use AI to inform their decisions, but software cannot guide you through the real estate world alone.
This is especially true when it comes to finding the right deals.
“The biggest hurdle is that the most valuable real estate data is still gatekept behind platforms like the MLS and private paywalls, making it very difficult to effectively train AI models,” he says.
“Real estate investing is becoming more about aligning with assets people cannot live without, which requires human insight into micro markets and supply dynamics that a machine just cannot fully grasp yet."
The "accountability gap”
For real estate investors, it boils down to whether they are deploying their own capital, or investing on behalf of clients.
Davis Householder, managing director, business development and acquisitions at MycoManagement, says the fiduciary angle is a nonissue for individual real estate investors. If you're using a gen-AI tool to pull market comparables or run a valuation model on a property you're buying with your own money, then from a legal/regulatory perspective that's functionally no different than doing manual queries and compiling the data in Excel yourself, he says.
“The fiduciary question only kicks in when someone is managing other people's money and, in that case, the obligation stays on the licensed adviser regardless of what tools they used to get there. AI doesn't absorb your fiduciary duty any more than a calculator does,” Householder adds.
Jay Zigmont, Ph.D., CFP, founder of Childfree Trust, agrees, pointing out that If AI misses something, it is not accountable, as you are the one using a tool—no different than using Excel to list your properties.
“You are responsible for the questions you asked, and the AI does not have a financial duty to you,” Zigmont adds.
However, he also notes that everyone is using AI today to find properties, examine them, and make recommendations, and if you are not using AI for research, you are at a disadvantage, even knowing the limitations of AI.
In which case can AI be helpful for real estate investors?
As Blackwood puts it, the best way to use AI is for agentic workflows, meaning using the tech to handle the “messy, vendor-heavy operations” that happen between signing a purchase agreement and actually closing the deal.
“It is perfect for streamlining the chaos of paperwork and coordination. You let the AI handle the heavy lifting on data and operations, but you keep the human fiduciary in charge of the final buy decision to ensure it aligns with specific yield and appreciation,” he explains.
In other words, AI is useful for the heavy lifting on the data side.
Householder notes that it can help with tasks such as pulling comparable sales, analyzing rent rolls and cap rates across markets, monitoring portfolio-level performance metrics, and flagging regulatory or zoning changes across multiple jurisdictions.
However, he also warns that investors need to be cautious about treating AI output as authoritative. An AI-generated property valuation, for example, doesn't meet regulatory standards and can't be legally substituted for a licensed appraisal, he says, and the final decision-making still needs to come from someone who understands the full context of the deal.
“Once you move from 'here's the organized data' to 'here's what I think it means for this specific client's situation and suitability,' that's where the human adviser needs to be doing the work,” he adds.
And that’s ultimately where the crux of potential issues is.
Bob Hutchins, an AI expert, psychologist, cultural media theorist, and founder and CEO of Human Voice Media, says that the debate is not whether to use AI in your investing decisions, as you are most likely already using it indirectly. Rather, it’s about drawing lines regarding autonomy.
“While AI can provide excellent research and analysis, the final decisions regarding a major asset, such as a property, should remain in the hands of a person with qualifications, accountability, and a vested interest in maintaining a long-term relationship with you,” he says. “Drawing lines regarding autonomy is simply common sense and not anti-technological.”
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