“AI systems require massive amounts of data to work. For recommending an IRA allocation, this system would need plenty of examples of good and bad allocations for every potential client circumstance. For simple models using just age, income, and risk tolerance, this data might be available. But there is simply no data for the different economic and geopolitical environments that are possible. Humans rely on inductive cause-and-effect thinking to provide suitable recommendations for complex scenarios.
As for language models like ChatGPT or GPT-4, there is probably even less data. These models are built using publicly-available text, and I doubt that exists for every type of client. Because finance is rooted in numbers, it would be much more efficient to provide an AI system with specific numerical data to train than text. A language model doesn't make sense for portfolio decisions. Where a language model might be extremely useful is to help clients understand difficult financial topics. For example, it could explain the difference between a Roth IRA and Traditional IRA.
AI might be described like statistics on steroids, and statistical theory has been applied to the markets for decades. None of the legendary investors like Warren Buffett or Peter Lynch attribute statistics their success.”
Investment advice offered through Magnifina, LLC, a Registered Investment Adviser. SEC# 801-117932. This website and information are provided for guidance and information purposes only and are not intended to provide investment, tax, or legal advice. No historical or future performance claims are made. Please consult a qualified professional before making decisions about your financial situation or otherwise using any specific information contained herein.
Any linked materials are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the websites you are viewing.
Any service described as “free” or “complimentary” means there is no monetary or financial cost to you. However, these offers may require you to be in contact with us, provide certain information, or participate in meetings or consultations. We reserve the right to deny, discontinue, or limit access to any offer at our sole discretion.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
25 Broadway, 10th Floor
New York, NY 10004
Phone: (800) 732-0818