So, you’re betting on ChatGPT to make you a millionaire?
A whopping 50% of our Gen Z compatriots and just over half of the millennials have been turning to ChatGPT for investment advice. Yes, you heard that right. OpenAI’s AI chatbot, ChatGPT, has been playing financial guru to these folks, despite its own warning that it sometimes spouts off “plausible-sounding but incorrect or nonsensical answers”. Even if it’s not designed to dole out advice, it’s being summoned to do just that.
Is AI going to build your financial empire? Think again. Douglas Boneparth, president and founder of Bone Fide Wealth and certified financial planner, gives it to us straight – “It is by no means going to provide you with a way to beat the market”.
Putting ChatGPT to the test
Boneparth decided to put ChatGPT’s financial prowess to the test. He asked it to whip up a hypothetical diversified portfolio with 80% equity and 20% fixed income, tossing in a few guidelines on risk and the kind of ETFs he was eyeing. The result? An overenthusiastic table that added up to more than 100%. After pointing out the error to ChatGPT, it tried to rectify its mistake, but didn’t quite hit the mark. Boneparth, however, was impressed by how close ChatGPT got to delivering what he asked for.
Perception vs Reality
There’s a chance that folks leveraging AI tools like ChatGPT for financial advice might be misjudging the current capabilities and limitations of these tools. They’re data crunching powerhouses, sure, but does that mean they’re omniscient? Can they predict the future performance of a company? No.
AI might stumble upon a few lucky stock picks, but we’re not equipped to see if it can replicate these results over time. Moreover, the free version of ChatGPT only knows about world events up to 2021, so its responses aren’t exactly up-to-the-minute.
“There’s just fundamental components of the technology that are not there to do the things that you hope it would do,” Boneparth says. “There’s a difference between potential and reality. And the reality is we’re certainly not in a place where we should be relying on a ChatGPT bot or AI in general to be making investment decisions for ourselves.”
ChatGPT’s role in your financial journey
Alright, so maybe ChatGPT and other AI chatbots aren’t your ticket to a golden portfolio. But they’re not entirely useless either.
The technology can be a handy assistant when you need to look up the definition of financial jargon or gather data on a company you’re mulling over. But remember, don’t expect AI to take the place of human financial advisors anytime soon.
These AI tools might excel at crunching numbers, but when it comes to financial decisions that touch on feelings and behaviors – like deciding to pack up and move across the country or figuring out where to retire – a human financial advisor is your best bet.
“AI isn’t really capable of understanding the specific preferences of an individual, and therefore you’re not necessarily going to get tailored financial advice,” Boneparth says. “Anytime feelings and behaviors get involved, the financial planner or financial professional is likely going to be able to use their own ability to relate or commiserate and help process those feelings a lot better than what AI can do at this point.”
