AI investing is one of the fastest-rising search topics in Canada. Some of the interest is legitimate: AI can summarize filings, screen funds, explain terms, and help investors compare fees. But the same label is also used by scam websites, fake social media ads, deepfake videos, and "guaranteed" trading-bot pitches.

Treat AI as a research assistant, not a replacement for judgment, registration checks, risk management, or professional advice.

Useful ways AI can help investors

• Translate dense financial terms into plain English.
• Summarize fund facts, fee schedules, and risk sections.
• Create checklists for comparing ETFs or platforms.
• Explain how TFSA, RRSP, or taxable-account rules differ.
• Flag questions to ask an advisor or brokerage support team.

These uses still require verification. AI systems can hallucinate numbers, cite outdated fees, miss tax exceptions, or ignore your personal constraints.

A good AI use case: making the boring work easier

The safest use of AI is not "tell me what to buy." It is "help me read this document." A Canadian investor can use an AI tool to summarize a fund facts page, list the questions to ask a brokerage, or turn a fee schedule into a checklist. That still leaves the investor responsible for checking the original source.

A useful workflow is simple: ask AI to explain the term, verify the number from the fund company or regulator, then write your own decision note. If the tool cannot point you back to a source you can inspect, treat the answer as a draft, not a fact.

Dangerous uses of AI investing

• Following a bot's buy/sell signals without understanding the strategy.
• Using AI to trade options, futures, crypto, or leveraged ETFs without risk controls.
• Depositing into a platform because a celebrity-looking video recommended it.
• Trusting backtests that ignore fees, taxes, spreads, slippage, and bad periods.
• Giving a tool account credentials, bank access, or personal identity documents.

AI scam warning signs

The Ontario Securities Commission has warned that AI can make scams more convincing through fake ads, profiles, testimonials, and "AI-backed" trading claims. CIRO's general fraud red flags also apply here.

Common AI pitches decoded

"Our bot wins in all markets" usually means you should ask for audited performance, full drawdown history, fees, and whether the results are live or backtested. Backtests can be shaped to look better than real trading.

"Limited seats left" is pressure, not evidence. Real registered firms do not need you to rush money through a private chat before you can verify who they are.

"AI removes risk" is false. AI can process data, but it cannot remove market losses, fraud risk, liquidity risk, currency risk, tax risk, or the risk that a model simply stops working.

How to vet an AI investing tool

1. Identify the legal company name, not just the app name.
2. Check registration through official securities regulator tools.
3. Search the exact domain plus "investor alert" and the company name.
4. Read the fee schedule and custody arrangement.
5. Confirm whether it gives general tools, managed portfolio service, or personalized advice.
6. Ask how it handles conflicts, data, account access, and trade authorization.
7. Do not connect bank or brokerage credentials unless you understand the permissions.

Data and privacy questions

Investing tools can ask for sensitive information: income, age, goals, account balances, tax details, risk tolerance, employment, identity documents, and sometimes transaction data. Before entering anything, read what the tool collects, where the data is stored, whether it is used for model training, and how you can delete it.

Be especially careful with tools that ask for brokerage logins. If you grant account access, understand whether the tool can only read data or can also place trades. A real product should explain permissions in plain language.

AI research prompt you can safely use

A safer use of AI is to ask for questions, not answers. Example:

"I am comparing two Canadian-listed ETFs. Create a checklist of things to verify from the fund facts, including MER, holdings, asset allocation, distribution history, currency exposure, risk rating, and tax slips. Do not recommend either fund."

What AI cannot know about you

A generic AI tool usually does not know your full income, tax bracket, spouse's income, debts, pension, emergency fund, risk tolerance, employer plan, contribution room, immigration status, benefit eligibility, or time horizon. Those details are exactly what determine whether an investment is appropriate.

A one-hour diligence routine

1. Search the legal company name, not just the app name.
2. Check registration and investor alerts.
3. Read the pricing page and privacy policy.
4. Look for realistic risk disclosure, not only upside examples.
5. Ask whether you are buying software, advice, a managed account, or a security.
6. Sleep on it before depositing. Scams dislike delays.

What a legitimate tool usually will not promise

A serious investing tool will not promise that every user earns the same return. It will not say risk has been eliminated. It will not ask you to hide the opportunity from family, borrow money to invest, or move funds through a personal crypto wallet. It should explain limitations clearly, including market risk, model risk, data quality, fees, and conflicts of interest.

The boring disclosures are not a weakness. They are part of the evidence that the provider understands the rules. If a pitch has excitement but no disclosure, treat that as a warning sign.

Where AI fits in a long-term portfolio

AI may improve research tools and customer service, but most households still need the same basics: emergency cash, debt control, registered-account planning, diversified investments, low fees, and behaviour they can repeat. A tool that helps with those basics can be useful. A tool that replaces them with constant signals and urgency is probably making the plan worse.

Keep a human checkpoint

If an AI tool produces an investing idea, pause before acting. Check the original source, read the risk section, compare fees, and ask whether the idea still fits your account and time horizon. For larger decisions, a registered advisor or tax professional may be more appropriate than another prompt.

The best use of AI is to make you a better question-asker. The worst use is to outsource responsibility for a decision you do not understand.

Use AI to slow down, not speed up

The most dangerous AI investing pitch is speed: instant signals, instant deposits, instant confidence. A better use is the opposite. Ask the tool to list risks, opposing arguments, fees to verify, and questions a skeptical investor would ask. If the answer makes you slower and more careful, it is probably helping. If it makes you feel rushed, it is probably increasing risk.

In investing, a twenty-four-hour pause is usually free. Use it.

Related LoonieLabs guides

• How to start investing in Canada
• Best investing apps in Canada: comparison framework
• Trading vs investing
• Crypto tax in Canada

Sources

• OSC - Artificial Intelligence and Retail Investing
• CSA/OSC - AI and social media investment scams
• CIRO - warning signs of investment fraud
• CIRO - check registration before investing