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

mitsloan.mit.edu

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

#72

Post by padolsey »

I wonder if telling (or somehow architecturally coaxing) the LLM it has 'skin in the game' will make it more risk-averse? I imagine it does.

This makes me wonder too about the entire premise and worthiness of these evals. They orient themselves around normal one-shot interactions with a likely non-sys-prompted model with no built up context or memory of the person. I doubt the mentioned 'job loss' scenario is even contextually seen as a 'loss'; it is only a circumstance descriptor, a single snapshot without a history. Maybe to get the best advice we actually need to tell the LLM our entire story, not just a narrow request for a question; a question that - itself - is biased to our own imaginings of what problem we perceive ourselves as having, which humans are often bad at.

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

#74

Post by ElProlactin »

zeroq wrote: post #69
jbs789 wrote: post #15

The hard part is behavioural/emotional/psychological rather than technical. Usually discussions about money are never actually about money, but rather safety, fear, etc. That’s where a real advisor earns their keep. Understanding the client and instilling confidence/comfort.

This. It's easy to make a good call, but it's really hard to stick with it. The main financial advice I'm giving to all relatives is to write down their decisions before buying anything. Or, if you're looking for a long term investment - asking someone close to change the password on your account without letting you know. The major problem with investing is that most people will commit to 2-5y strategy, and panic on…

> If you did your due diligence and you believe that this particular asset will grow within 5 years...

This assumes that most people know how to do "due diligence" and that their "predictions" are accurate. Most people don't actually have the knowledge and skill to evaluate the investment vehicles (stocks, bonds, etc.) available to them so their predictions are inherently limited and flawed.

> ... when it starts dipping after few months, and nothing major has changed in your predictions - you should buy more instead of selling.

One of the biggest mistakes average people make is selecting investments with risk profiles and durations that are mismatched to their needs and objectives. This is why, for most people, it's much better to use a properly-selected model portfolio than to try to pick individual stocks.

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

#75

Post by slg »

There doesn't appear to be any control in this study. Sure, someone taking the LLM's financial advice might end up in a better position than someone who took no advice, but would they end up better than someone who hired a financial adviser, asked a friend, or simply read the first article that came up after googling their question?

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

#76

Post by impendia »

paulpauper wrote: post #9

AI financial advice encourages people to save more, diversify their investing, and take on less risk as they age. sounds like pretty generic advice. I thought they meant it gives good stock picks or trading strategies. That would be noteworthy. This is just "meh".

I have to assume that there are hedge funds or someone like that, already investing extensive effort into trying to get AI to beat the market. I assume that it can't, but if I'm wrong then whoever figures this out stands to get extremely rich.

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

#77

Post by sheepolog »

anigbrowl wrote: post #67
grg0 wrote: post #55

Earlier quoted context omitted.

Right, that's the 'what', but not the 'how'. > Prompt: but I don't have enough money to save, I can barely make ends meet. > AI: I see the problem now---If you don't have enough money to save, and reducing your expenses is not an option, then the answer is clear: make more money.

I don't know why you're being downvoted here. A huge amount of 'financial advice' boils down to 'stop being poor,' which is to say it's about what to do with your economic surplus rather than what to do if you don't have one and aren't long on avocado toast.

I didn't downvote them, but I am genuinely curious to hear from people who "can't save money", and try to understand why that's the case. My assumption is that a large percent of them are spending way more than they need to, but that could easily be an incorrect stereotype.

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

#79

Post by B-Con »

zeroq wrote: post #69
jbs789 wrote: post #15

The hard part is behavioural/emotional/psychological rather than technical. Usually discussions about money are never actually about money, but rather safety, fear, etc. That’s where a real advisor earns their keep. Understanding the client and instilling confidence/comfort.

This. It's easy to make a good call, but it's really hard to stick with it. The main financial advice I'm giving to all relatives is to write down their decisions before buying anything. Or, if you're looking for a long term investment - asking someone close to change the password on your account without letting you know. The major problem with investing is that most people will commit to 2-5y strategy, and panic on…

I've learned this applies to a lot of life. Being a good manager, tech lead, consultant, etc, advisor, parent, friend, etc, is sometimes just half being a good therapist and helping them regulate.

I've watched a lot of "not officially financial advice" finance videos on YouTube (the solid people, not grifters), and while the financial theory side is interesting, when they talk about pragmatic investing and patterns of client behavior they have dealt with professionally, a large part of it is emotion management. Convincing clients to stick with a solid plan even when this month is abnormally bad, or avoid going all-in on the latest hotness, etc.

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