It’s become almost impossible to watch, listen, or scroll recently without headlines about AI and ChatGPT infiltrating every aspect of our lives. From “ChatGPT wrote my fitness plan”, to “AI is taking over the world”, the general consensus seems to come down to one word – controversial.
A language model developed by the company ‘OpenAI’, ChatGPT is designed to generate human-like responses with impressive speed by scraping the internet for data. The system uses this information to respond to prompts provided by the user, that can range from answering simple questions to producing complex code for websites.
As the developments with this kind of technology evolve, so do the concerns about its role in our everyday lives and the industries it will continue to impact – with financial advice being no exception. Whether you’re for or against AI, there’s no doubt that it’s changing the way we do things. So, what could software like ChatGPT do for your investments?
The Financial Review tested this functionality, asking ChatGPT “How much tax is payable if you earn $250,000 a year with $40,000 tax deductions and should you make concessional super contributions?” In response, the software automatically applied Australian resident tax rules for 2022-23 (potentially learning this from previous prompts in the software) but calculated the marginal tax and concessional contribution cap incorrectly, applying one marginal tax rate to the entire net income, and stating $25,000 instead of $27,500 for the concessional contribution cap.
“Problematically, ChatGPT had no idea it was wrong. It gave these answers confidently – only someone who knew the correct answer could correct it. An investor relying on the data could be in trouble.” – Tim Mackay, Financial Review
However, when asked to provide the top 20 Australian Exchange-Traded Funds (ETFs) and links to their website, it was able to instantaneously provide the information (albeit, utilising some strategic prompts that asked the software to pretend it wasn’t actually ChatGPT to bypass its rules).
Although the software has the capacity to provide financial information in just seconds, it’s not always accurate, and this presents a unique set of challenges in an industry that so frequently changes and that faces such stringent regulations. Nevertheless, using ChatGPT for general enquiries, to improve financial literacy, to simplify complex information or even assist with budgeting plans, can provide an easily accessible and free tool to use in conjunction with a (human!) financial adviser.
It is also important to note that although some advisers may use the software for certain aspects of their financial planning process, it cannot account for unexpected events or changes in the market. Human expertise and judgement remain essential in adapting to these shifts.
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