Tuesday, January 2, 2024
HomeMutual FundIs AI necessary in investment advisory?

Is AI necessary in investment advisory?


“Is AI necessary in investment advisory? Will it make a difference?” was one of the responses we received for this article: Retirement Planning with AutoGPT: The Informal Future of Investment Advisory.

The truth is AI is already well and truly here and here to stay. At the time of writing, in areas relevant to us, AI was being used as chatbots, custom image and video designers, data analytics, and data and text summarizers (Company reports for stock analysis are one of the earliest implementations).

Amazon has started summarising reviews with AI. AI plays a big role in deciding our social media feeds. Soon, Meta will include AI as an assistant in Facebook groups. Once Google implements it seamlessly into search, it will be a game-changer. And this is just the start! A few days ago, Google launched VideoPoet, a new large language model for text/image/sound to video generation! Grammarly now has generative AI to help with essays and email responses. Things are happening so fast that I had to update this paragraph twice in the last few days before publication!

AI is used for all sorts of content generation. At freefincal, we use AI to write article excerpts for social media posts. We use AI for headline generation.  The headline is the most important part of an article. We ask ChatGpt for 7-8 alternatives (giving our headline or the entire article as input).

It is then mixed and matched to create what (hopefully) would be attractive and representative but not clickbaity (naturally, this is subjective).  We have already tried the AI-generated freefincal podcast! Soon, we hope to use AI image generation for unique featured images. Incidentally, stock photo portals like Getty Images and Istock already have this option.

We are not impressed with how ChatGPT performs as a chatbot when given copious amounts of freefincal information. Yes, they need meticulous training, which is quite expensive and does not make sense for us.

So, to answer the reader’s question, “Is AI necessary in investment advisory? Will it make a difference?” AI has a role in financial advisory; it will make a difference, but it must be used, monitored and regulated well.

For example, if someone trains the AI model on all the books used in the Certified Financial Planner course or the NISM Investment Advisor Exams level 1 and 2 syllabus or any other broad knowledgebase and allows it to create financial plans for clients, which are then human-verified before handover, I would not be so enthusiastic.

This is because the possibilities of creating a financial plan for a given circumstance are generally quite diverse. If we send a client to 100 SEBI Registered Investment Advisors, we will get 100 different plans. This means the AI can churn out many more combinations, most unnecessarily verbose, and the probability of some of them being wrong will be quite high.

If we send 100 clients to the same advisor, we can find patterns and create a robo-advisor with AI as an assistant to both parties.

If we can train the bot only on our instructions for different client groups (the patterns and the associated math), we stand a much better chance (with human review). Naturally, this still won’t be perfect, but it should be better than a textbook with generic instructions. The “voice” of the person or organization behind the effort will be seen to some extent, increasing the number of clients they can service.

To this extent, I see promise in AI implementation. After the financial plan creation (by human, robo or AI), clients may have many questions which could be left to the AI to summarise from the plan. This can save immense time for the advisor.

I am even more enthusiastic about using AI as the front end of a robo advisor. Take, for example, the freefincal robo advisor tool. If a large language model can appreciate the rules behind it and learn how to use it, it can take questions from a human user, feed them into the robo tool and come up with easy-to-understand action items. It can summarise and perhaps even simplify the outputs (hopefully without distortion). At the time of writing, this is more of a goal without a plan, a.k .a. a dream.

I am sure there are other ways to implement AI into financial advisors that I cannot think of, and I eagerly look forward to seeing them. In 2024, this is going to happen gradually. Regulators must quickly establish norms for entities using AI. Otherwise, it will be another case of watch, learn and react instead of pro-act. The ball is in SEBI’s court, and the clock is ticking.

Using artificial intelligence requires real intelligence. The latter has always been hard to find. So caveat emptor (buyer beware) and caveat lector (reader beware) are now more important than before.

Do share this article with your friends using the buttons below.


🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!


Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!


New Tool! => Track your mutual funds and stock investments with this Google Sheet!


Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp

Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth! 

Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let’s Get Rich with Pattu Podcast

You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.

Lets Get RICH With PATTU podcast on YouTube
Let’s Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!


Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.


Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.


Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   


Our new book for kids: “Chinchu gets a superpower!” is now available!

Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.

Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!

Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!

Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.

Buy the book: Chinchu gets a superpower for your child!


How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!


Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!


We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.


About freefincal & it’s content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)


Connect with us on social media


Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.


Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.


Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)


 



RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments