New Delhi, Aug. 22 -- With investors increasingly relying on AI (artificial intelligence) for everything from portfolio management to mutual fund selection, financial advisors frequently get asked, "Why pay a financial advisor when AI can do it for free?"

But a quick test of these chatbots revealed a glaring problem, said Mrin Agarwal, financial educator and chief executive of Finsafe India Pvt. Ltd.

AI frequently offers financial advice, such as arbitrary fund recommendations or short-term equity exposure, without assessing an investor's goals or risk capacity. Whereas Agarwal said, a financial advisor would typically begin with an assessment of goals and risk.

The core problem, Agarwal said, is that investors do not stop to check whe...