Advertisement
Continue reading the main story
Supported by
Continue reading the main story
The financial services industry is plotting how to incorporate tools like ChatGPT into its products. But humans will still be necessary to provide personal advice.
Send any friend a story
As a subscriber, you have 10 gift articles to give each month. Anyone can read what you share.
9
(Video) Dave, Are You Worried About A.I. Financial Advice?
By Paulette Perhach
Paul Weiner, an artist, has been experimenting with artificial intelligence for the past year, generating A.I.-created visual disinformation and seeing whether he can get the images to spread. But recently, he turned to ChatGPT, a chatbot that has the ability to respond to complex questions, for a much different reason: With his 30th birthday looming, he decided to ask it for advice about retirement planning.
“Maybe ChatGPT would have some answers that I might otherwise get from someone who I’d have to pay a lot of money to,” he said.
Generative A.I. like ChatGPT has knowledge workers gripping the rails, bracing for how it might affect their jobs, and consumers leaning in to see what costly services could soon be replaced with a prompt. As the investment industry turns to artificial intelligence as a financial planning and advice tool, the values of accuracy, humanity, security and accessibility are jostling for prominence. In the future, who — or what — will we be asking to advise us on some of life’s most important decisions?
ChatGPT recommended that Mr. Weiner open a Roth individual retirement account and certificates of deposit, as well as automate his savings and create a budget. He hasn’t yet opened any of the accounts or, as the chatbot also suggested, worked with a financial adviser.
“It’s a lot of information that gets thrown at you pretty quickly,” Mr. Weiner said. He found the short explanations insufficient for what a C.D. does or the differences between a Roth I.R.A. and a traditional I.R.A. He concluded that speaking to a financial adviser would probably be more helpful.
“But that kind of circles back to the whole reason I’m doing this on ChatGPT to start with — it’s free,” he said.
Image
A.I. has joined the financial chat
Delyanne Barros, a money coach, said she felt that most of the hundreds of thousands of people who follow her on social media had no idea what ChatGPT is. “Am I the only one geeking out on this thing?” she asked. When she asks her followers if they’ve used it, she said, “they’re like, ‘What are you talking about?’”
She’s teaching them the basics: There’s a free version of the service, and it works as more than just a Google alternative.
On Instagram, she asked if any investing newbies had asked ChatGPT to teach them to invest. Some had tried but reported that they kept getting stuck in a loop of repetitive answers. Ms. Barros found that she was able to get valuable information about allocations, tax efficiencies and retirement withdrawal rates, but she posits that was because she had knowledge of the investment terms she needed to use.
“You have to know how to frame the questions,” she said. “A lot of people don’t understand that you get an answer to something and it can build on that answer. You can ask follow-up questions, and it’s like a chain.”
Ms. Barros has also used ChatGPT to double-check her calculations regarding her retirement plan. Despite its handiness, she is not worried that chatbots will replace her.
“With something like investing, I’m not concerned as a personal finance educator, because I can see that it’s not like: ‘Oh, we don’t need you anymore. We have ChatGPT,’” she said. “If anything, this is going to be a tool that’s going to enhance my coaching experience with people, but it’s definitely not going to be replacing us, because people still need a lot of guidance.”
Even if you don’t think you’re familiar with it, chances are you’ve already been using generative A.I.
Intuit started to integrate A.I. into its software products, which include Mint and TurboTax, more than a decade ago, said Ashok Srivastava, the company’s senior vice president and chief data officer. Today, he said, Intuit’s platform performs 58 billion machine learning predictions per day. Another Intuit product, QuickBooks, predicts cash flow for small businesses, and the company has found that when it gives users advice based on artificial intelligence, 95 percent of small-business owners take that advice.
They’re still focusing on a strategy that combines human interactions with A.I.-powered ones. Customers, for example, can meet with a live expert, and then A.I. will create a categorized and tagged summary of the conversation for later review.
Image
Bugs in the system
As of now, the technology is promising, but it’s not 100 percent accurate.
“These systems tell plausible stories, they give you plausible ideas, but not necessarily correct ones,” Mr. Srivastava said. “What we’re focusing on is actually providing the correct experience to the person, so that it’s grounded in reality and data that is appropriately personalized to them, so then they can make the best financial decisions as they move forward.”
Mr. Srivastava said he did not envision a future where humans were taken out of the financial planning equation.
“I’ve grown up in the field, I’ve seen it evolve, and it’s an amazing technology,” he said. “I think that the human connection is still important. I envision that we will want to help C.P.A.s, bookkeepers, financial planners, financial advisers — everyone in this ecosystem — grow and prosper along with the use of artificial intelligence.”
Josh Pigford, the founder and chief executive of Maybe, had been building a personal finance management platform that could help people make financial decisions when ChatGPT debuted. A few months ago, Maybe was rebuilt from the ground up, this time with GPT, the technology behind ChatGPT, as the foundation of the platform. The process always begins, he said, with a question people want to answer.
“The way that we were initially tackling this is giving you access to a financial adviser who can answer those questions for you directly,” Mr. Pigford said. “As we started testing GPT’s ability around that, we realized, well, OK, actually GPT can do this really well.”
Things became even more interesting when people added their financial data and information, such as age, location, and goals. The system could then take into account everything from dependents to joint filing to local tax codes — details a financial adviser would be able to use — and deliver that directly to the consumer.
That, of course, brings up the subject of privacy. Through Maybe’s system, the banking information is secured and does not feed back to OpenAI, the company that created ChatGPT.
Hallucinations — the tendency for ChatGPT to spout off incorrect information — have also become a worry. Mr. Pigford and his team identified the issue during early testing.
“There was a point there where it was actually making up entire transactions, and building this back story of like, ‘You bought this item from Home Depot to help cool off your living room,’” he said. “That’s a legitimate problem.”
As the technology has improved, Mr. Pigford has seen a drastic decrease in these hallucinations in just weeks. The way they’re designing the software includes a toggle to switch between a chatbot and humans for advice.
“The belief, the hypothesis, what we’re sort of banking on is that we’re able to actually offer that sort of hyper-personalized input and advice without you having to, you know, form a relationship with a certified financial adviser where you’re paying them an assets-under-management fee, or even paying them, you know, a couple hundred bucks an hour,” he said. “You’re able to get very specific advice, regardless of what your financial situation is.”
But Mr. Pigford believes it’s too early to do away with live professionals. “I think we’ll have some transition period where we’ll want humans involved for a while,” he said. “The goal is not to completely do away with a financial adviser.”
First steps into the ChatGPT world
Glenn Hopper, author of “Deep Finance: Corporate Finance in the Information Age,” relates this GPT era to the screech of dial-up internet. The prevalence of A.I., he said, is “going to come quicker than the adoption of the internet and broadband internet and web browsers.”
“I’ve stopped making predictions, because every time I make a prediction, I’ll say six to 12 months, and then I’ll read an article the next day that this item has already appeared,” Mr. Hopper said.
He warned that tools like ChatGPT would make scamming and phishing more sophisticated, so users should be cautious of anyone asking for their bank information.
“The very first thing that I tell everyone is, if you’ve been ignoring artificial intelligence up until now — stop,” he said. He doesn’t think people need to become experts, but they should have a basic understanding of how the technology works, he said.
“If we’re going to hand over our decisions to them, and we don’t have any idea how they’re working, I mean, you might as well shake one of those Magic 8 Balls and get the answer from that,” he said.
Advertisement
Continue reading the main story
FAQs
Will artificial intelligence replace financial advisors? ›
There's no doubt that AI is a highly effective tool to leverage and to help augment your skillset. However, despite its many advantages, AI is unlikely to completely replace the human element in financial advising roles.
Will AI affect financial advisors? ›AI will likely be able to help with most of the technical financial variables going forward. But there is a huge difference between textbook or spreadsheet knowledge and the management of client relationships. Financial plans can be complicated because life can be complicated.
How AI can help in finance? ›For financial institutions, AI lets organizations accelerate and automate historically manual and time-consuming tasks like market research. AI can quickly analyze large volumes of data to identify trends and help forecast future performance, letting investors chart investment growth and evaluate potential risk.
What is the impact of AI in personal financial management? ›Risk Management - AI tools can analyze market data and predict market trends, helping investors to manage risk and make informed investment decisions. Retirement Planning - AI tools can help investors create a retirement plan based on their current financial situation, expected future income, and other factors.
What jobs are hardest to replace by AI? ›- Chief Executive Officers (CEOs) Even the job of an entrepreneur is one of those who will hardly see robots instead of men. ...
- Lawyers. ...
- Graphic Designers. ...
- Editors. ...
- Computer Scientists and Software Developers. ...
- PR Managers. ...
- Event Planners. ...
- Marketing Managers.
However, both AI and Human Financial Analysts have their unique strengths and limitations and they cannot be perfectly interchangeable. AI will certainly be a valuable tool to assist humans in the financial industry, but it will never be able to completely replace them.
Will robo advisors replace financial advisors? ›Robo-advisors may be useful for beginner investors with limited assets, but they lack the full range of benefits that would let them serve as true replacements for traditional, human financial advisors. If your finances could benefit from a personal touch, please contact us for a complimentary consultation.
Are financial advisors declining? ›The number of financial advisor jobs is increasing despite a decrease in the total population of financial advisors. This could indicate that the demand for financial advisors is increasing, and that there may be a shortage of financial advisors in the future.
Is artificial intelligence a threat to accountants in the future? ›As a result, the future will offer smart applications that drive value for accountants and their clients. The Economist also recently indicated that there is a 94% likelihood that AI will lead to job losses in the accountancy profession over the next two decades.
What are the problems with AI in finance? ›Security and Compliance. One of the main challenges of AI in financial services is the amount of data collected that contains sensitive and confidential information requires additional security measures to be implemented.
What are the disadvantages of AI in banking? ›
- Expensive: Artificial intelligence is a very expensive technology to implement! ...
- High Cost of Error: Not only is artificial intelligence very expensive to implement, but the cost of errors made by it can also be very large.
It could increase efficiency and reduce costs for banks while providing faster and more accurate customer support. And all of this would be available 24/7, making it easy for customers to get help by answering questions, resolving issues and providing financial education outside of regular business hours.
What skill can't AI replace? ›Critical thinking is a skill that will never be replaced by AI. Even though machines are excellent at evaluating data, they lack the human capacity for critical thought. It's a talent that is necessary for a variety of fields, including business, law, and medicine.
Does AI destroy more jobs than it creates? ›Disruption rather than destruction
What appears clear from the research is that AI and associated technologies do indeed disrupt the labor market, with some jobs going and others emerging, but across the board there are more jobs created than lost.
"It's possible that advanced AI technology could play a role in the financial advisory industry in the future. However, it's unlikely that AI will completely replace human financial advisors in the near future," ChatGPT said.
Can AI do financial Modelling? ›AI will be able to run scenarios and assess the results much better than humans can. As Financial Modellers we can then review the areas of possible interest highlighted by the software.
Can AI take over stock market? ›AI has revolutionized the stock market in many ways, from automating analysis and trading to helping investors make more informed decisions. AI-powered trading systems have been designed to identify patterns in stock market data and use these insights to make better decisions.
What are 2 cons negatives to using a robo-advisor? ›- Limited Access to Human Advisors. ...
- Narrow Investment Choices. ...
- Might Not Consider All Your Investments. ...
- Tax-Loss Harvesting Isn't Always Helpful.
Bottom line. Robo-advisors offer the convenience of a hands-off investment management strategy at a lower cost. However, if you prefer more human interaction and need recommendations based on a more nuanced view of your overall financial picture, a financial advisor could be the way to go.
What is the average yearly return for robo-advisors? ›But according to the Robo Report, the five-year returns (2017 to 2022) from most robo-advisors range from 2% to 5% per year. And Wealthfront, one of the best robo-advisors available, also states that customers can expect about a 4% to 6% return per year, depending on their risk tolerance.
Are financial advisors worth the 1%? ›
If you're already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they've helped you accomplish. For example, if they've consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.
What percent of millionaires have financial advisors? ›Seventy percent of millionaire households used some sort of financial adviser, and the average length of that relationship spanned 10 years, the survey found.
Why don t Millennials use financial advisors? ›"The bigger issue at hand is that financial advisors often have minimums that make it difficult to serve millennials at the tail-end of the age bracket – those born between 1990 (and) 1996 – because they typically have not accumulated enough money to meet the minimum requirement needed to work with fee-based advisors," ...
Why accountants will not be replaced by AI? ›There's no easy answer to this question. But the general consensus is that while AI will certainly change how accountants do their jobs, it will not replace accountants. Simply put, AI is designed to enhance human capability, not replace it.
Who will be most affected by AI? ›According to the report, jobs in agriculture, mining and manufacturing are the least exposed to generative AI, while jobs in the information processing industries, like IT, are the most exposed because jobs that use "programming and writing skills" are more closely related to GPT's capabilities.
What jobs can AI replace? ›Tech jobs such as software developers, web developers, computer programmers, coders, and data scientists are "pretty amenable" to AI technologies "displacing more of their work," Madgavkar said.
How AI is expected to change the future of finance? ›AI and machine learning are being used to improve fraud detection and prevention in banks. For example, machine learning algorithms can analyze transaction data to identify patterns of fraudulent activity, and also use behavioral biometrics, such as fingerprint or facial recongnition, to detect suspicious activity.
Why do AI investments fail? ›AI projects usually fail because of poorly defined goals, lack of data and insufficient resources.
What is the conclusion of AI in finance? ›AI in finance is generally about learning of patterns, data and many developments in the financial world. In conclusion, artificial intelligence significantly contributes to the finance industry, and it will continue to keep the financial services updated and ready to face the market.
Will AI help the world or hurt it? ›The creation of a human-level AI would certainly have a transformative impact on our world. If the work of most humans could be carried out by an AI, the lives of millions of people would change. The opposite, however, is not true: we might see transformative AI without developing human-level AI.
Will financial advisor be replaced by robots? ›
“It's possible that advanced AI technology could play a role in the financial advisory industry in the future. However, it's unlikely that AI will completely replace human financial advisers in the near future,” ChatGPT said.
Will robo-advisors replace financial advisors? ›Robo-advisors may be useful for beginner investors with limited assets, but they lack the full range of benefits that would let them serve as true replacements for traditional, human financial advisors. If your finances could benefit from a personal touch, please contact us for a complimentary consultation.
Will AI replace Cfps? ›AI technology is already being used to help financial advisors make decisions, but it's unlikely to replace them entirely. It can be a powerful tool to help advisors provide better service to their clients.
Will AI eliminate accountants? ›With the increased capability and further scope enabled by deep learning, there is a potential threat to traditional accountants. It is not just the accountants; the role of CFOs is also changing. Payroll, billing, record-keeping, etc., are done by automation. Risk management, simulation, etc., are done by AI.
Do rich people use robo-advisors? ›While many may still prefer a human financial advisor, robos tend to attract affluent millennials who are highly engaged with their finances, and feel comfortable making their own financial planning decisions, right from their phone or laptop.
Do robo-advisors outperform the market? ›Most robo-advisors are clear that they won't beat the market. It's just not the way these platforms work. Since robo-advisors typically invest in index funds, there's virtually no chance that you could ever beat the market.
Why would you use a robo-advisor instead of a personal financial advisor? ›For core investing and planning advice, a robo-advisor is a great solution because it automates much of the work that a human advisor does. And it charges less for doing so – potential savings for you. Plus, the ease of starting and managing the account can't be overstated.
Will accountants be replaced by AI and accountants become obsolete? ›In the accounting profession, there are concerns that AI will take over jobs and make human accountants obsolete. However, this fear is largely unfounded and based on misconceptions about the capabilities and intentions of AI.
Is AI the future of banking? ›Banks could also use AI models to provide customized financial advice, targeted product recommendations, proactive fraud detection and short support wait times. AI can guide customers through onboarding, verifying their identity, setting up accounts and providing guidance on available products.
What is negative of AI for accounting? ›Although AI can perform complicated work, they are not able to make decisions based on a wider context, unless that data can be codified. Professional accountants are able to work with their client to present solutions and options in a manner that is understandable.
Which professions will be replaced by AI? ›
Tech jobs such as software developers, web developers, computer programmers, coders, and data scientists are "pretty amenable" to AI technologies "displacing more of their work," Madgavkar said.
Why accountants can't be replaced by AI? ›AI technology can handle many basic accounting tasks more efficiently and without human error, but human accountants are still needed to analyze and interpret AI data. There are human elements of accounting, such as experience, instinct, trust, and compassion, that cannot be replaced by a computer.