MIT Study: AI Financial Advice is Surprisingly Good with Better Prompts
From MIT: AI financial advice is surprisingly good
Our research at MIT Sloan reveals that Large Language Models offer surprisingly effective financial guidance, often outperforming human advisors for many users. While AI consistently encourages saving and diversified investing, its quality depends heavily on prompt structure. We found that detailed, academic-style questions significantly improve advice, whereas vague prompts can lead to wealth gaps based on user demographics and financial literacy.
A lot of the people who would benefit from financial advice are precisely the people who don't have a lot of resources.
- jamestimmins
AI seems to struggle most when it has to make decisions with lots of trade-offs, especially where the context or implications of various decisions are nested, which is presumably why it struggles to write full software systems that are well-designed.
By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health.
- padolsey
I wonder if telling (or somehow architecturally coaxing) the LLM it has 'skin in the game' will make it more risk-averse? I imagine it does.
This makes me wonder too about the entire premise and worthiness of these evals. They orient themselves around normal one-shot interactions with a likely non-sys-prompted model with no built up context or memory of the person. I doubt the mentioned 'job loss' scenario is even contextually seen as a 'loss'; it is only a circumstance descriptor, a single snapshot without a history. Maybe to get the best advice we actually need to tell the LLM our entire story, not just a narrow request for a question; a question that - itself - is biased to our own imaginings of what problem we perceive ourselves as having, which humans are often bad at.
- mvc
I think you gotta be pretty lucky or disciplined with a high income from an early age to be in a position to start unloading risk at 45.
Most folks don't have disposable income after rent and bills until they're 30.
- networkOne
Yes, financial planners will be one of the first industries to totally revamp itself because of AI. $2,000 for some SoA which is 99% boiler-plate? No thanks.
I spent years in this industry, and the advice from these 'experts' is demonstrably poor.
- dmix
I use YNAB (https://www.ynab.com/) for budgeting so I already had all of my financial data in a single source. Exporting the CSVs locally and asking Claude to be my financial advisor legitimately gave me good advice. Not just nagging me to save more (which is always useful), but how to organize my budget categories better, detecting longer term spending patterns I wasn't thinking much about, researching credit card reward programs based on my spending patterns, digging deep into interest and tax rates in way I never bothered etc.
That was the first time I felt like real people's jobs were threatened by AI. Financial advisors and tax accountants better adapt quickly.
- mjr00
AI financial advice is surprisingly good... for now. But given the historical trajectory of both the finance and advertising sectors I can't imagine it will, for long. AI responses without ads are unoptimized space!
It only takes Draftkings writing a very large check to Google before it responds to financial questions with solid advice before ending with, "Since you have a few spare hundred dollars laying around, why not try a high-risk investment into same-game parlays?"
- AussieWog93
People in this thread are massively underestimating the level of financial illiteracy in the general population.
We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years.
More that tried to convince me to gamble on random pump and dump shitcoins.
More still that talked about "investing" in random collectables like Funko Pops or Pokemon cards - they're not a bubble, Logan Paul told me so!
You could replace the AI with a piece of paper that says "set aside 10% of your income and invest it in an ETF" and it would outperform the financial "advice" that people receive on a daily basis.
- jbs789
The hard part is behavioural/emotional/psychological rather than technical.
Usually discussions about money are never actually about money, but rather safety, fear, etc.
That’s where a real advisor earns their keep. Understanding the client and instilling confidence/comfort.
- clickety_clack
Half the title is missing, and the missing half is doing some heavy lifting: “– especially if you ask the right questions”
- calmbonsai
AI, atm, is a perfect distillation of financial platitudes from ~10 years ago.
FWIW, bonds are no longer a hedge against equity unless they’re based against private equity and private equity is both more expensive and more performant than ever.