Artificial intelligence software ChatGPT, which is creating a sensation in technology circles, is going to make its most immediate impact in the crisis-ridden financial advice sector, where it has the capacity to make the long anticipated promise of “robo-advice” a reality.
Financial advisers across the market have been testing the software successfully on a range of tasks – from retirement calculations to disclosure obligations – in recent months, prompting suggestions that the so-called open artificial intelligence technology will finally create low-cost accessible finance advice for Australian investors.
Ben Neilson, a PhD at the University of Southern Queensland who has published a research paper online on the role of AI in financial advice, believes it will be more valuable than many in the finance industry anticipate.
Neilson has drawn together research from four major advice firms along with a range of consumers and compliance officers to explore the possibilities of ChatGPT and found the technology could create answers to financial problems with high levels of accuracy, “creating required content in 3.88 seconds”.
Neilson, who is also a director of Neilson & Co Wealth Management, believes the technology has an “ability to create simple compliant financial recommendation content that far exceeds human capabilities”.
According to Neilson, the technology recognises key items such as superannuation caps, regulations, and tax tiers and can create “a significant advancement in the field of compliance and reduction of human error”.
However, the chief executive of the Financial Planning Association, Sarah Abood, moved to the temper the excitement around the software, suggesting: “It is a very exciting development and the ability of ChatGPT to answer financial questions is impressive. I think it’s going to be a real step forward for financial literacy. However, when it comes to advice I believe there are a number of limitations that will mean it is some time yet before we see big changes.”
Neilson also suggests the imperfections of the software create limits. “ChatGPT fails to reach the required level of complexity to work unguided and still needs professional guidance with anything more than singular strategies,” he suggests.
Researchers around the world are testing ChatGPT in every corner of finance from asset allocation to accountancy systems, but the wealth management area – which is notoriously laden with compliance surrounding what are often commoditised guides and recommendations – is wide open for innovation.
In the US a researcher managed to get the ChatGPT technology to finish and complete the CFA Level 3 exam – the key exam for professional wealth managers which concentrates on planning and wealth management.
In Australia analysts suggest the technology will soon be used to replace back office work – particularly correspondence with investors on routine issues.
One adviser who spoke to The Australian says: “I have been using it for answering questions on everything from superannuation rules to tax tables and it is very accurate – it’s not perfect but it going to get better since it improves the more people use it, rather like Google in its early days.”
Indeed Google, which had previously kicked back against using OpenAI or any automatically generated content on the search engine, has more recently updated its regulations to allow ChatGPT-generated content.
Meanwhile, Microsoft has invested a reported $US10bn ($14bn) to partner with OpenAI, the maker of ChatGPT, in a move that will ultimately embed the software into the Microsoft suite of products.
ChatGPT software is already sufficiently powerful to concern education institutions all over the world: this week the Education Department of WA banned the ChatGPT software from the public school system.
Banning the technology will not be so easy for the financial advice industry, where there is already a shortage of personnel and constant pressure mounted on the sector over rising costs.
Frustrated by paperwork and new exam standards, many advisers have been leaving the industry – more than 2000 resigned last year. The industry is now heading to less than 14,000.
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