ChatGPT is fun, but is it useful for financial planning?

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When OpenAI’s ChatGPT burst onto the scene in November, it took artificial intelligence (AI) mainstream. All at once, people could chat with AI, asking it questions and challenging its replies. It was an overnight sensation, many years in the making. But what are its practical implications for financial advisors?

“I’ve been talking to wealth management and asset management firms in Canada for quite a while about AI, and I think everybody’s making some small investments and dipping their toe in the water,” says Robert Madej, founder and chief executive officer of Toronto-based PureFacts Financial Solutions Inc., which provides technology and data expertise to financial services providers. “But by and large these tools are not on the forefront of advisor desktops.”

Mr. Madej sees that changing – and quickly. He estimates roughly 1 per cent of advisors are making effective use of AI today, but predicts that number will rise to 100 per cent by 2030.

ChatGPT, in particular, has the potential to speed up aspects of advisors’ role so they can spend more time doing what they do best – interacting with clients. Mr. Madej points to the tool’s ability to explain concepts in clear and simple language. That could be useful, for example, in helping an advisor communicate product recommendations.

However, Mr. Madej warns, there are concerns about the quality of information coming out of AI tools. For example, early on, he asked ChatGPT if 19 was a prime number and it said “no.” Then he asked it the highest prime number under 20 and it said “19.”

Following up more recently, Globe Advisor asked ChatGPT if 19 was a prime number and the reply was, “No, 19 is a prime number because it is only divisible by 1 and itself.” When challenged on the mixed response, it acknowledged, “I made a mistake in my previous response. Yes, 19 is a prime number.”

The risk, says Mr. Madej, is if you ask it a question and don’t know the answer, ChatGPT could provide incorrect information with complete confidence. That’s a warning advisors should pass along to clients who have started playing around with the tool.

Nevertheless, whether it’s ChatGPT or other AI tools in development, Mr. Madej sees extensive uses in advisory practices – from creating personalized birthday e-mails to assisting with new client onboarding, detecting data errors in client reports and red-flagging potential fraud.

“[ChatGPT] is really in its infancy, and everybody’s expectation is it will get smarter, better, faster,” Mr. Madej says.

Putting AI to work

Adam Bornn, certified financial planner with Parallel Wealth Financial Gorup Inc. in Langley, B.C., is already using ChatGPT to create outlines, titles and hooks for YouTube videos. In one of those videos, he explains how clients can use the tool to get definitions of common terms and concepts and do basic calculations – a potential time-saver for him.

Mr. Bornn also used ChatGPT recently to get a primer on registered disability savings plans when a client’s child was approved for the disability tax credit. As he hasn’t done a lot of work in this area, he appreciated the high-level summary, after which he knew what to search for to get more details.

He feels ChatGPT’s strength is its ability to summarize vast stores of information online quickly in one concise answer. Its weakness is that it doesn’t share its sources.

“Google … will show you a million answers, but you can also see where those answers are coming from and you can dig through ones that are credible and [discard] some that aren’t,” Mr. Bornn says. “Whereas, ChatGPT just gives you an answer. It may be right, but where does it come from?”

So far, he’s been impressed by the accuracy of answers ChatGPT has supplied, even when he’s asked detailed and complex financial planning questions. But he has the professional knowledge to vet the answers. He agrees with Mr. Madej that clients need to understand the tool’s limitations.

Looking to the future

Down the road, as ChatGPT and other tools like it develop, Mr. Bornn would like to embed an AI-powered question-and-answer platform into his firm’s website to answer basic questions so he can focus his efforts on the complicated parts of financial planning. He can also see using ChatGPT to create first drafts of fact sheets – for example – by asking it to provide 10 reasons to use a registered retirement savings plan.

Davyde “Day” Wachell, CEO and co-founder of Vancouver-based Responsive AI, which builds productivity-enhancing software for advisors, emphasizes that realizing the full potential of ChatGPT will take time.

“The technology [behind ChatGPT] is amazing. It’s going to change everything,” Wachell says. “But it’s going to need five years at least, maybe even 10, for people to build reliable domain-specific applications that make use of that technology.”

Wachell points to the long development arc of the database technology SQL, which emerged in 1974 but was only widely applied in customer relationship management and website software in the 2000s.

For now, Wachell says it’s important to remember that just because ChatGPT can come up with responses that resemble an actual conversation in a particular domain space, there aren’t enough guardrails yet.

“For me, the question is, how do we plug this fantastic technology into real business practices that can be regulated in a way that’s reliable and observable [so that] advisors and investors are going to want to use it and feel confident in it?” Wachell says.

And what about the question that may be keeping some advisors up at night – is there a danger of AI one day replacing advisors? Mr. Bornn isn’t worried.

“It’s good for the 30,000-foot view,” he says. “The value to most of our clients is the personal relationship [and] experience, and AI won’t ever replace that.”

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