What does ChatGPT mean for the future of retirement planning?

If ChatGPT and artificial intelligence are indeed the future of decision-making, what does that mean for the future of retirement planning?

Retirement planning by definition requires investors and their advisors to look to the future in order to prepare for its contingencies. ChatGPT is a natural language processing tool driven by AI technology that enables users to have human-like conversations with a so-called “chatbot” that might not be able to predict the future, but at least can provide the best answer available. 

Put the two together and one would think it would be a perfect match. Right?

InvestmentNews caught up with Kevin Myers, a partner at Flynn Financial Partners, to learn how ChatGPT and artificial intelligence are currently being used in the retirement arena, as well how they might be used in the future.

InvestmentNews: How are ChatGPT and Open AI affecting retirement investing right now? Who is using them and how? Are you?

Kevin Myers: We don’t see ChatGPT or Open AI significantly impacting retirement investing at this time. This technology is in the experimental phase. It will be a while before the industry adopts the technology for retirement investing.

The more seasoned advisors remember the talk that robo-advisors would replace the human financial advisors, and that never fully materialized. I suspect the younger generation of financial advisors will embrace the use of artificial intelligence more quickly as a productivity tool. I believe the younger advisors will see AI, not as a threat to the jobs like the more tenured advisors perceived as robo-advisors, but to provide better value to clients more efficiently.

And yes, we have experimented with ChatGPT, but not with anything related to our clients. We are curious to see the type and depth of responses to the questions we ask ChatGPT. Unfortunately, as you may have heard elsewhere, the quality of the AI-generated answers could be better regarding accuracy and detail. We at Flynn Financial constantly assess any productivity tools that will make us more efficient to help us better serve our clients.

IN: How may AI be used in the future to be used to help retirees?

KM: We see the integration of AI as one tool in the toolkit, or one piece to the puzzle. We believe that “AI Technology” will be complementary — and not a substitute — to a financial advisor.

There are several ways that AI will be used to help retirees. One way I see it is to help create better risk assessment tools based on a client's occupation and personality type. Most financial advisors claim they create financial plans, but we haven't seen many do the work. AI will inevitably gain traction and be used to crunch the numbers with a rapid turnaround.

Another opportunity for AI is the ability to help create bespoke portfolio solutions, which is a ways away before it becomes standard industry practice. In a world where an omnipresent social media presence is increasingly expected, we see the use of AI as a way to address representing one's social media presence.

We also see AI as an educational tool to help brainstorm and simplify complex topics into more digestible pieces that clients can consume more easily.

IN: What’s the potential both for good and bad?

KM: We see enormous opportunities for productivity enhancements by servicing clients while lowering costs, which will provide a better overall client experience.

On the flip side, we are concerned that the industry may become overreliant on AI without properly implementing robust due diligence checks to validate the AI-generated responses and solutions.

IN: How do you know if the AI responses and proposals are accurate? How often is the AI code updated? Who is updating the AI?

KM: The bottom line is that advisors will still need to do their own homework, based on their client’s unique circumstances. 

IN: What are the current regulations with regard to AI and retirement investing? What is the SEC focusing on now?

KM: Regulators have historically taken a reactive approach to new technologies, and we anticipate the same as it relates to AI and retirement investing. I cannot say what the SEC is focusing on right now, but I suspect the SEC will take a similar approach as when algorithmic trading was introduced to the trading markets. Then, the SEC and other regulatory bodies required investment banks to develop policies and procedures to ensure that the use of algos did not harm client orders.

IN: What are the areas that post the biggest dangers for investors in the future? What will regulators be seeking to curb?

KM: There will always be dangers for investors, but that is also part of the risk-reward dynamic investors must consider. One potential danger is relying on AI too much, and not reassessing one’s investment process and thesis for investing.

At Flynn Financial, we mirror our process after the methodologies of how large, global pension funds invest. We try and take a top-down, systematic approach when investing while considering how market events may impact our strategies. Earning and maintaining a client’s trust is paramount, and that will never change. Therefore, the qualitative side of being an advisor will always remain a top priority, and it will be just as important as the quantitative tools one uses to service clients.