The Ethics of AI in Financial Planning: Bias, Transparency, and the Role of Human Judgment

The fast-growing use of artificial intelligence (AI) has introduced new ethical issues in the financial services sector. Robo-advisors, loan algorithms, and automated financial instruments now make choices that impact people's lives substantially. These automated instruments may lack fairness, clarity, and human supervision. Without adequate checks, they could generate discriminatory decisions or erode trust in financial institutions. This paper sets forth a normative-ethical framework to help oversee the responsible use of AI in financial planning. The study identified a novel framework known as the EFT Model, which has four pillars: Ethical Design, Fairness, Transparency, and Human Oversight. The paper examines each principle in detail, illustrating it with practical examples like discriminatory loan approvals and unclear investment recommendations. Roles and accountability of key players such as developers, regulators, financial institutions, and customers are also clearly identified. The paper harmonizes the framework with existing regulations like the EU AI Act, the GDPR and discusses how it could help direct ethical design in practice. It also underlines the importance of conducting additional research with the intention of testing and refining the model under real-world conditions.