Artificial intelligence (AI) is changing the way businesses operate, and the financial advice industry is no exception. One of the most exciting developments in AI is the emergence of language models that can generate human-like text. One of the most impressive examples of this technology is ChatGPT, a language model developed by OpenAI.
So, what exactly is ChatGPT, and how is it poised to impact the financial advice industry?
ChatGPT is a computer program that uses deep learning algorithms to understand and generate natural language text. It can engage in natural language conversations with people, answer questions, and even generate its own text-based content.
One of the key benefits of ChatGPT is its ability to analyze financial data quickly and accurately. Financial advisors can use this technology to get a more complete picture of their clients' financial situations and offer tailored advice. For example, ChatGPT could analyze a client's investment portfolio and recommend specific strategies based on their risk tolerance and investment goals.
ChatGPT can also help financial advisors improve their communication with clients. It can generate responses in natural language, making it easier for clients to understand complex financial concepts and increasing their confidence in the advice they receive.
ChatGPT can be used to provide instant customer support to clients through chatbots. Chatbots powered by ChatGPT can engage in natural language conversations with clients, answering their queries and addressing their concerns. This can help financial advisors provide round-the-clock customer service and enhance the client experience.
ChatGPT can analyze large amounts of data to identify potential risks in a client's financial portfolio. This can help financial advisors make informed decisions and mitigate potential losses. ChatGPT can also monitor the market and alert financial advisors to emerging risks or opportunities in real-time.
ChatGPT can be used to educate clients about financial concepts and investment strategies. By providing clients with the information they need to make informed decisions, ChatGPT can help improve financial literacy and increase client confidence.
If you still aren’t convinced that ChatGPT has the potential to revolutionize the financial advice industry, you may be interested to learn that it wrote this entire article (up to this point, of course). Assuming that the program was not exaggerating its own ability (or blatantly lying), it seems as though ChatGPT is extremely confident that it will be a highly useful resource for financial advisers, their clients, and independent investors alike.
Whilst the benefits that ChatGPT offers are, of course, exciting, the potential consequences of its emergence must also be considered. If ChatGPT is capable of completing so many of the tasks that have traditionally been undertaken by financial advisers, what is to stop investors turning to (the currently free) ChatGPT for financial advice, rather than their advisers? Further, if investors were to rely on ChatGPT for their financial advice, how could they be sure that the advice they receive is in their best interests? Can ChatGPT prioritise the client’s interests over its own? And finally, how could the provision of financial advice by ChatGPT be effectively regulated by ASIC?
Clearly, the emergence of ChatGPT raises a number of questions. However, there is absolutely no question that its emergence will have an immense impact on the financial advice industry.
So… is now the time to start incorporating ChatGPT into your business model? Unfortunately, there is no clear answer to that question. Although ChatGPT may certainly be useful, it also presents a number of significant risks. Namely:
The information that ChatGPT provides may be incorrect.
ChatGPT may inadvertently plagiarise other sources, thereby providing you with content that constitutes the intellectual property of another person or organisation.
ChatGPT has a ‘knowledge cut-off date’ of September 2021. This means that only data that existed prior to that date was used to train ChatGPT (i.e., it does not have access to real-time data).
ChatGPT is a serial people pleaser and will therefore tell you what it thinks that you want to hear (often at the expense of accuracy).
These risks are significant, careful vetting of any tasks undertaken via ChatGPT will be required and the risks should be taken into consideration and accounted for prior to the use of ChatGPT for commercial purposes.
For the time being, given that “ChatGPT is capable of making mistakes” (its own words), if you do have any questions in relation to the provision of financial advice, please do not hesitate to get in touch with the Financial Services Team at Cowell Clarke.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.