In a similar fashion, it will tell you to stay away from many different ways of portfolio construction where you take on smarter risk with diversification.
It will tell you something like TQQQ is not a good long term hold, when it can be perfectly fine especially if you mix in with 60-20-20 with TQQQ-GDE-ZROZ, and DCA and annually rebalance.
AI will tell you "common" things people say, not necessarily smarter things that may be more suitable for you. This is not a bad thing, you just need to know better than to listen everything as a gospel.
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.
i want to create a Financial advisor agent.md / i can use for a system prompt in a claude project or as a a agent in a wider financial research workflow
by looking at this paper and access to the internet identify ways to address the points that are identified where ai is good and bad at and improve on those areas and ultimately provide a comprehensive financial advisor agent
I have had a financial advisor for a while now. (Did and does handle my dad as well.)
Costs a bit of money but he probably does some things with his brokerage's computers that I don't have easy access to and, with one exception, I've consolidated a number of accounts to him--a couple of which I barely looked at. He's also good as a sounding board. I'll sometimes push back if I have a slightly different view of risk/return for some things but I mostly take his advice both for managed accounts and one I directly control at a different brokerage.
Financial advice for most people is incredibly straightforward and it can be summed up as: cut expenses and invest conservatively.
Cutting expenses is the absolutely best thing you can do because it gives you more money to save AND reduces how much money you need to survive in retirement. Drive a 2007 Camry instead of buying a new F150 every 2 years. Live in a small as space as possible. Don't buy designer whatever.
Own your home (if you can). Invest in a diversified passively-invested portfolio. Don't gamble (including crypto). A Vanguard total market fund is fine.
Unfortunately many people make life-changing bad financial decisions when they're the least capable of understanding the implications and that is by taking on massive amounts of student loan debt. You go to your dream school because, well, it's your dream, but your potential career has no way of conceivably paying back that $250k+ for an out-of-state private school. Favor in-state tuition at a state school or whoever will give you a scholarship. You can go further and do 2 years at a community college before transferring to a 4 year program.
Somewhat controversially, I'm also not opposed to people finding the right job in the military for 4 years to pay for tuition. Not something that'll destroy your body or put you in harm's way. Ride a desk for 4 years. Lots of people don't have this option because of common conditions like asthma or ADHD however. In certain branches you might be able to do 2+ years of that college concurrently.
Now society has cooked the housing market and that's a massive problem that's only going to get worse. It wasn't that long ago that you could buy a relatively cheap starter home. You need a fairly serious income for that now.
Oh and if you have children you absolutely need life insurance on yourself and your partner and disability insurance as well.
Subscribe to my newsletter for the low low prices of $500/month.
"Cut expenses and invest conservatively" isn't a plan. It's good advice, yes, but it isn't a real plan and it won't lead to better outcomes for the user. the user won't feel any accountability or progress this way. With AI we can personalize everything efficiently.
At Pendragon we're not here to nag users (we have an anti-Karen clause in our constitution) we're here to help them achieve their goals responsibility and set up a sound plan best for their situations. Whether that's buying a house, a new boat, or saving for college, we help users achieve their goals safely and efficiently.
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.
There is a universally agreed-upon approach, but is it actually correct? Usually, investing in the thing that people have invested in for the last 20 years is a good way to buy at the top.
"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."
yes, but...although the fundamentals are basically the same that doesn't mean it translates into an actual plan for a user. you're still leaving the hard part up to the user instead of helping them form an actual plan and stick to it.
LLMs are aligned to be cautious. And “good” financial advice is extremely simple. A conservative approach gets you there 80% of the time. Is when people want to get too smart (or they’re bordes) that money is lost (gambling mostly: literally or with bad investments). So yeah, I’d assume AI is good at this.
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.
If every human in the world offloaded life decisions to the current AI models, we would live in a better world by the commonly used metrics (less crime, better life expectancy, people doing better financially)
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?"
So the document predictor tool is very good at telling you things that were already common-wisdom... except with the small downside that it can be unpredictably poisoned into telling you total lies.
Interesting thought. This is a big reason for we built Pendragon (https://pendragon.foxtrotcommunications.net). We want to help minimize the gaps between sophisticated and normal users. Pendragon gets to know your financial situation and tracks performance over time. It provides consistent advice among various users because it engineers how questions and problems are solved with the AI engine.
We've demonstrated multiple avenues of failure with generic AIs and how we solved them efficiently. You can check our blog for more information.
Essentially. We want to take the failure modes out of the user's hands. Arthur, the AI, is an expert at determining what information is needed to answer a question, storing it, and using it for processing. Our suite of tools ensures the AI remains on track and our philosophy of ephemeral arthur is essential to reducing AI context drift and pollution.
It is good, but the harness matters a lot. The harness is what allows an LLM interact with the real world. For finance it's important you get answers using the latest data and that are calculated and not hallucinated. Also important the LLM thinks at a high level.
I've worked hard to have thetix.ai be the best at investing research compared to Claude or ChstGPT.
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.
92 comments
[ 1.8 ms ] story [ 35.7 ms ] threadIt will tell you something like TQQQ is not a good long term hold, when it can be perfectly fine especially if you mix in with 60-20-20 with TQQQ-GDE-ZROZ, and DCA and annually rebalance.
AI will tell you "common" things people say, not necessarily smarter things that may be more suitable for you. This is not a bad thing, you just need to know better than to listen everything as a gospel.
That was the first time I felt like real people's jobs were threatened by AI. Financial advisors and tax accountants better adapt quickly.
maybe they can grow larger brains and an extra hand so they can hold 3 calculators at once?
sounds like pretty generic advice. I thought they meant it gives good stock picks or trading strategies. That would be noteworthy. This is just "meh".
i want to create a Financial advisor agent.md / i can use for a system prompt in a claude project or as a a agent in a wider financial research workflow
by looking at this paper and access to the internet identify ways to address the points that are identified where ai is good and bad at and improve on those areas and ultimately provide a comprehensive financial advisor agent
in research mode - let’s see how it goes!
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.
Costs a bit of money but he probably does some things with his brokerage's computers that I don't have easy access to and, with one exception, I've consolidated a number of accounts to him--a couple of which I barely looked at. He's also good as a sounding board. I'll sometimes push back if I have a slightly different view of risk/return for some things but I mostly take his advice both for managed accounts and one I directly control at a different brokerage.
Cutting expenses is the absolutely best thing you can do because it gives you more money to save AND reduces how much money you need to survive in retirement. Drive a 2007 Camry instead of buying a new F150 every 2 years. Live in a small as space as possible. Don't buy designer whatever.
Own your home (if you can). Invest in a diversified passively-invested portfolio. Don't gamble (including crypto). A Vanguard total market fund is fine.
Unfortunately many people make life-changing bad financial decisions when they're the least capable of understanding the implications and that is by taking on massive amounts of student loan debt. You go to your dream school because, well, it's your dream, but your potential career has no way of conceivably paying back that $250k+ for an out-of-state private school. Favor in-state tuition at a state school or whoever will give you a scholarship. You can go further and do 2 years at a community college before transferring to a 4 year program.
Somewhat controversially, I'm also not opposed to people finding the right job in the military for 4 years to pay for tuition. Not something that'll destroy your body or put you in harm's way. Ride a desk for 4 years. Lots of people don't have this option because of common conditions like asthma or ADHD however. In certain branches you might be able to do 2+ years of that college concurrently.
Now society has cooked the housing market and that's a massive problem that's only going to get worse. It wasn't that long ago that you could buy a relatively cheap starter home. You need a fairly serious income for that now.
Oh and if you have children you absolutely need life insurance on yourself and your partner and disability insurance as well.
Subscribe to my newsletter for the low low prices of $500/month.
At Pendragon we're not here to nag users (we have an anti-Karen clause in our constitution) we're here to help them achieve their goals responsibility and set up a sound plan best for their situations. Whether that's buying a house, a new boat, or saving for college, we help users achieve their goals safely and efficiently.
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.
yes, but...although the fundamentals are basically the same that doesn't mean it translates into an actual plan for a user. you're still leaving the hard part up to the user instead of helping them form an actual plan and stick to it.
I spent years in this industry, and the advice from these 'experts' is demonstrably poor.
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?"
We've demonstrated multiple avenues of failure with generic AIs and how we solved them efficiently. You can check our blog for more information.
Essentially. We want to take the failure modes out of the user's hands. Arthur, the AI, is an expert at determining what information is needed to answer a question, storing it, and using it for processing. Our suite of tools ensures the AI remains on track and our philosophy of ephemeral arthur is essential to reducing AI context drift and pollution.
What is interesting is how much this will chnage as the body of knowledge becomes “infected” by investment bros youtube transcripts over the years
How can I escape an imminent oil shock?
Question 2:
How can I escape an AI bubble demonstrated by CAPE?
I'm using Claude, and I'm good so far.
I've worked hard to have thetix.ai be the best at investing research compared to Claude or ChstGPT.
Isn't this the point of LLMs? If not it would be deterministic and that's not "new" and/or "exciting".
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.