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AI financial advice is surprisingly good, especially if you ask right questions

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Re: AI financial advice is surprisingly good, especially if you ask right questions

#121

Post by AussieWog93 »

CliffyA wrote: post #117
bradfa wrote: post #104

Earlier quoted context omitted.

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

As the OP has "Aussie" in their name I think they'd be referring to the Commonwealth Bank of Australia Dollarmites accounts. They were shutdown recently after a watchdog investigation. It was locking kids into using the bank that would continue into adulthood and schools were getting paid to sign kids up. https://www.morningstar.com.au/personal-finance/the-lessons-... "They found that it provided little value for chi…

Funnily enough the two people we heard that "advice" from were Brits and Saffas. It's just bad interest yields compounding over decades.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#123

Post by hibikir »

kccqzy wrote: post #70
jamestimmins wrote: post #19

AI seems to struggle most when it has to make decisions with lots of trade-offs, especially where the context or implications of various decisions are nested, which is presumably why it struggles to write full software systems that are well-designed. By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health.

This is the common fallacy of “AI is terrible in my own field of which I have deep knowledge, but AI is totally fine in this other field of which I only have cursory knowledge.” Even ignoring all other aspects of financial advice and only focus on saving for retirement, there are so many topics involved like asset allocation glide paths, tax advantaged accounts, safe withdrawal rate, sequence of return risk, etc etc.…

You are comparing to the almighty, not to the kind of financial advisor most people would find while looking at random. Between those with very high AUM fees, those selling bad vehicles that they get kickbacks for and such, people are basically getting robbed already.

It's not that one cannot get very specific, technical advice that helps, but someone without much financial literacy cannot tell someone doing honest work for a reasonable price from easy to find scammers with a marketing budget. The AI isn't going to get everything right, and it's not going to be easy to send good, proding questions to double check things without sufficient financial literacy, but that boring baseline is miles ahead of what most people get, as it's not trying to deceive you professionally, at least for now.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#124

Post by MBCook »

bradfa wrote: post #104
AussieWog93 wrote: post #98

People in this thread are massively underestimating the level of financial illiteracy in the general population. We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years. More that tried to convince me to gamble on random pump and dump shitcoins. More still that talked about "investing" in random collectables like Funko Pops or Pokemon car…

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

My checking account isn’t the best out there at 1%. Same with my savings account at 3.4%.

Neither of those is anywhere near inflation. You are effectively losing money by parking it there.

Most checking accounts don’t pay interest at all. I looked up Bank of America's savings account: 0.04%.

You read that right. Effectively zero. And it’s a flat rate. Whether you have $10 or $10 million in there.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#125

Post by MBCook »

AussieWog93 wrote: post #111
bradfa wrote: post #104

Earlier quoted context omitted.

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

The banks might pay 3% interest, whereas even non-volatile conservative investments like cap notes or bonds would pay something like 7%. Plugging it into a calculator: 1.03 ^ 18 = 1.70 1.07 ^ 18 = 3.37 Example numbers, but you're effectively taking half of the money that your kid would have had on their 18th birthday, and giving it to a banker.

3% is amazingly good. It’s not hard to beat that, but a savings account at a common bank can easily be below 0.05%.

I looked up BoA. 0.04%.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#126

Post by deadbabe »

networkOne wrote: post #25

Yes, financial planners will be one of the first industries to totally revamp itself because of AI. $2,000 for some SoA which is 99% boiler-plate? No thanks. I spent years in this industry, and the advice from these 'experts' is demonstrably poor.

Financial planning is mostly a solved problem. For whatever goal and situation a person is looking for, there's already an optimal path that has been long proven.

The only times you need very custom advice is at very high levels of networth or ownership, as in "you want to sell stock but you have to physically find the buyers and negotiate deals because you can't just sell on the open market without disrupting the price"

Re: AI financial advice is surprisingly good, especially if you ask right questions

#127

Post by MBCook »

hibikir wrote: post #123
kccqzy wrote: post #70

Earlier quoted context omitted.

This is the common fallacy of “AI is terrible in my own field of which I have deep knowledge, but AI is totally fine in this other field of which I only have cursory knowledge.” Even ignoring all other aspects of financial advice and only focus on saving for retirement, there are so many topics involved like asset allocation glide paths, tax advantaged accounts, safe withdrawal rate, sequence of return risk, etc etc.…

You are comparing to the almighty, not to the kind of financial advisor most people would find while looking at random. Between those with very high AUM fees, those selling bad vehicles that they get kickbacks for and such, people are basically getting robbed already. It's not that one cannot get very specific, technical advice that helps, but someone without much financial literacy cannot tell someone doing honest w…

They are also assuming that the comparison is to a financial advisor and not either nothing or a relative/friend who may or may not give good advice.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#128

Post by GuB-42 »

bradfa wrote: post #104
AussieWog93 wrote: post #98

People in this thread are massively underestimating the level of financial illiteracy in the general population. We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years. More that tried to convince me to gamble on random pump and dump shitcoins. More still that talked about "investing" in random collectables like Funko Pops or Pokemon car…

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

From a return on investment perspective, it is not great.

Bank accounts are convenient and safe, but you pay the price with low interest rates. But if you don't intend to touch that money for 18 years, you don't need the ability to withdraw at any time without losing money that a bank account offers, so why pay the price for it?

However, it has symbolic and educative value, teaches the value of saving, how interest works without going into the complexities of the financial system, and making it clear to your kids that it is their money, even if they can't touch it yet. So it may be a good thing for that reason, when the sums are reasonable.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#129

Post by groundzeros2015 »

AussieWog93 wrote: post #111
bradfa wrote: post #104

Earlier quoted context omitted.

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

The banks might pay 3% interest, whereas even non-volatile conservative investments like cap notes or bonds would pay something like 7%. Plugging it into a calculator: 1.03 ^ 18 = 1.70 1.07 ^ 18 = 3.37 Example numbers, but you're effectively taking half of the money that your kid would have had on their 18th birthday, and giving it to a banker.

Yes… I also wouldn’t park money in a savings account for 18 years.

But 7% is not the risk free rate! The S&P and these other things have risk!

But show me a bond I can buy that’s paying 7% and I’ll show you below investment grade.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#130

Post by lotsofpulp »

orsorna wrote: post #101
singpolyma3 wrote: post #95

Earlier quoted context omitted.

I mean, never DCA anything that's terrible advice. But still better than what most people do.

If you only have a fixed amount of money to put aside every month, DCA makes sense. That applies to 99% of people. Not terrible at all.

That's not really choosing to "DCA", that's just not having enough money to not be able to "DCA".

Which is what's so funny about 99% of people that talk about DCA...they don't have any other option.

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