The big problem with ChatGPT's financial advice - Heart of Wealth

How much can you trust what ChatGPT, Claude or Gemini tell you about finance? Advisers put that to the test at an event in Scotland, and Citywire reporter Madeleine Anderson was there to witness the dawn of the machine era, which currently looks like it will produce lots of long, impenetrable reports. ‘The length of the answers was just kind of completely impossible to read through. Someone got a 52-page response to one of their questions,’ she told Heart of Wealth. Another problem at the event organised by the Lang Cat was that chatbots were offering ‘clearly quite specific investment advice’ despite not being regulated. Our guest Jeremy Taylor, CEO of Lazard Asset Management, said the biggest risk is that chatbots won’t focus on the individual needs of clients. ‘They’re not dealing with the broader set of concerns or issues that people have. They’re going to narrow in to the most common advice.’ But he also pointed out that the wealth world needs to work with AI to boost the number of people who get help, given that just 9% of people actually get advice, according to FCA data. He said a suggestion that the regulator makes rules for chatbot advice could change the picture. ‘Maybe at this point, the advice being given will start to be more structured and hopefully useful for the end consumer.’ The Goldilocks asset Citywire private markets editor John Schaffer also explained why infrastructure topped polls at our Private Assets for Wealth (PAW) event in Lucerne last week. Returns are obviously part of the picture, but so is infrastructure’s place as offering something different from public market returns. ‘A lot of the underlying investments are government-backed, so they all seem a bit of a Goldilocks asset at the moment,’ Schaffer said. Taylor added that recent bond selloffs and jumps in the oil price have driven interest in Lazard Asset Management’s listed infrastructure offering. ‘It’s a very long-duration asset, and we’re seeing inflation come through,’ he said. Finfluencer slippery slope We also turned our eye to finfluencers, after Citywire reported on the growing trend of asset managers partnering with social media accounts on educational content to reach a younger generation. While some content is useful, there are concerns about working with yet another unregulated part of the market. ‘We do need to be careful,’ Taylor said. ‘This is a very slippery slope.’ He pointed to infrastructure and bond selloffs as examples of where more complex topics can be garbled by people without deep specialist knowledge. ‘How many influencers really want to lean into situations like that, which are much more investment savvy?’ #savings #investing #ai