ChatGPT replacing human investment advisors isn’t a question of ‘when’ but ‘if,’ Wharton professor says
Good morning. Any investment advisors concerned about being replaced by AI can breathe easy—perhaps for quite some time.
On a recent episode of Wharton's Ripple Effect podcast, finance professor Michael Roberts shared what he’s learned from researching AI and engaging with those who are implementing it. “It’s hard to not see [AI] as being central in one way or another to financial literacy, and financial practice, more broadly,” he said. But “where it is right now is simply nowhere near where it needs to be in terms of a stand-alone, say, investment advisor or a financial guru for individuals.”
I had a chat with Roberts to find out more, particularly his thoughts on AI's effect on Wall Street C-suites. “AI is going to start playing an increasingly important role,” he said. “I already see it being used.” (At the Fortune Brainstorm AI conference in London last week, experts discussed the big banks, such as JPMorgan Chase, that were early adopters.)
Finance, fundamentally, is applied data analysis, Roberts told me, and AI is a “tool in the practitioner's arsenal for addressing financial challenges." In one example, he explained how students in his data science for finance course used ChatGPT to “crank out Python code, so they can focus on the financial issues rather than getting bogged down,” adding that it was “fantastic."
However, when students put ChatGPT to the test in his applied finance course, the bot answered somewhat easy questions incorrectly. “On more complex and more subtle questions, it often struggles,” he said. “It just doesn't know how to answer the question yet. It’s almost like a smart high schooler who takes an intuitive or naive approach to a problem.” When posed with broad, open-ended questions like, “How should I save for retirement?” or “What should I invest in,” it didn't know where to begin.
Roberts is a finance expert and not a data scientist, emphasizing that when it comes to generative AI "I only understand as an end user.” But his findings, predominantly based on using ChatGPT, show that it's “not at a place right now where it's going to replace investment advisors."
“I don't know when, or if, it will ever completely remove the need for registered investment advisors,” he added.
A recent study by researchers at Queen’s University, Virginia Tech, and JPMorgan A.I. Research that examined how large language models like ChatGPT and GPT-4 performed in mock CFA exams. And the results were underwhelming. “We concluded," the researched wrote, "that ChatGPT would likely not be able to pass the CFA level I and II, under all tested settings."
But in the meantime, the technology still can be quite useful when it comes to financial education—not just for those at elite business schools but, really, by anyone.
“I can't engage with a YouTube video, but I can engage with ChatGPT,” Roberts told me. “That’s one of the reasons why it's really going to be central to financial literacy and financial education.”
Sheryl Estrada
sheryl.estrada@fortune.com
María Soledad Davila Calero curated the Leaderboard and Overheard sections of today’s newsletter.
This story was originally featured on Fortune.com
