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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, w

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.

aprilthird2021 2mo ago
> 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. What will AI do when those rules, which it's trained on their repetition so much, don't apply anymore? ~8% annual stock gains for the next 40 years may not hold and an 80/20 stock/bond ratio may not be as wise in upcoming decades
- toomuchtodo 2mo ago
  Models can be updated when foundations domain knowledge graphs are built on change. As of this comment, target date funds and pensions containing trillions of dollars adhere to the assumptions you mention (asset class allocation, growth rate and return assumptions, safe withdrawal rates ["Trinity study" aka ~4%/year], etc), and so consumers of AI provided guidance assuming these foundations could do much worse (as they already do today due to lack of information, knowledge, will, etc). You literally just need to stick the Bogleheads forum into your AI assistant of choice for most folks, if they'll listen (which is the hardest part, imho, people want to gamble, not invest, in my experience). Prompt "What is your age?" respond "Optimal target date fund is 20XX fund based on your current age and retirement age, please confirm to set to default for investing." I suppose this will eventually make its way in some form into every banking, fintech, and brokerage mobile app chatbot in some capacity. https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card If you want to get fancy, crib off of California's now mandatory high school financial literacy curriculum for grounding. https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB2927 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... ("computah, teach me how to personal finance and invest")
  - foxtrot8672 2mo ago
    Context mangement is necessary to fully realize the power of AI financial advice. Memories, financial history, and decisions need to made with the AI. This translates into the epistemic record of every answer and its how we do it. This allows us to precisely repeat AI experiments with a given set of inputs and is necessary to ensure a high quality output. The paper talked about how an AI informed the usr to build a financial emergency fund. but, when the user lost their job, the AI completely forget it existed. This proves our theory that context management is the key to unlocking the full potential of AI financial advice.
- mjr00 2mo ago
  Stock/bond ratios are way too advanced for what's qualifying as good advice here: > AI consistently advised people to save during their working years, draw down savings in retirement, invest heavily in diversified stock funds, and reduce stock exposure after age 45. This is analogous to saying to an aspiring software developer, "You should write clean and testable code, have clearly defined API boundaries, and a repeatable build process." All very true, but also so general and basic that it's not helpful.
  - grg0 2mo ago
    Right, that's the 'what', but not the 'how'. > Prompt: but I don't have enough money to save, I can barely make ends meet. > AI: I see the problem now---If you don't have enough money to save, and reducing your expenses is not an option, then the answer is clear: make more money.
    - bdangubic 2mo ago
      AI is right on the money here (pun intended)
    - anigbrowl 2mo ago
      I don't know why you're being downvoted here. A huge amount of 'financial advice' boils down to 'stop being poor,' which is to say it's about what to do with your economic surplus rather than what to do if you don't have one and aren't long on avocado toast.
      - sheepolog 2mo ago
        I didn't downvote them, but I am genuinely curious to hear from people who "can't save money", and try to understand why that's the case. My assumption is that a large percent of them are spending way more than they need to, but that could easily be an incorrect stereotype.
        singpolyma3 2mo ago
        It's actually almost certainly true just on the basis of basic numbers. Many people who are really actually quite poor (making say under $35k CAD annually for a family of 5) manage to make ends meet and even save a little. So if you make more than this but can't save any it's because you're spending on things they are not and which are therefore nonessential. Now maybe restaurant food, name brand groceries, driving two SUVs, vacations, etc etc whatever it is for a given person are seen as essential. That's how lifestyle works after all and we often can't imagine our lives without it. So I'm not saying it's a "simple" matter of just spend less because it's often not very simple feeling. But from a numbers PoV it is possible for most people who otherwise see themselves as struggling in theory.
- gloryjulio 2mo ago
  Investing and trading is a dynamic game. If everyone has the edge of certain portfolio to out perform the average, then no one has the edge. Similarly AI is not going to solve that. Because everyone would end up with similar AI edge until no one has the edge. People should start with simple universal rules: Stay invested. Buy low cost diversified etf fund. Favor long term investment instead of trading. Learn something from all weather portfolio composition to hedge the risks.
  - inigyou 2mo ago
    When everyone is crowding into one investment that investment tends to get irrationally over-saturated. With the current makeup of the S&P500 we can predict it will dramatically crash in real value in the next five years.
    - kasey_junk 2mo ago
      That’s why the classic investment advice is to hedge your exposure to the equities markets, do more so the closer you get to retirement and don’t put money you need in the next 7 years in equities. The bigger concern with the classic advice is that bonds have become more correlated with equities and our backtesting was all done during a time period where the American liberal international economic system was dominant so we aren’t sure that it will hold up to the new partitioned order.
    - gloryjulio 2mo ago
      [dead]
- epolanski 2mo ago
  Sound financial advice is not "go all in on SP500". Albeit that's more sensible than what the overwhelming majority of retail investors do. Sound financial advice takes into account the financial situation, time spans, goals, risk adversity, etc.
kccqzy 2mo ago
This is the common fallacy of “AI is terrible in my own field of which I have deep knowledge, but AI is totally fine in this other field of which I only have cursory knowledge.” Even ignoring all other aspects of financial advice and only focus on saving for retirement, there are so many topics involved like asset allocation glide paths, tax advantaged accounts, safe withdrawal rate, sequence of return risk, etc etc. Financial advice is universally agreed upon, to the same extent that advice about software engineering is also universally agreed upon, you know, like write unit tests, write maintainable code, etc. But the devil is in the details.
- hibikir 2mo ago
  You are comparing to the almighty, not to the kind of financial advisor most people would find while looking at random. Between those with very high AUM fees, those selling bad vehicles that they get kickbacks for and such, people are basically getting robbed already. It's not that one cannot get very specific, technical advice that helps, but someone without much financial literacy cannot tell someone doing honest work for a reasonable price from easy to find scammers with a marketing budget. The AI isn't going to get everything right, and it's not going to be easy to send good, proding questions to double check things without sufficient financial literacy, but that boring baseline is miles ahead of what most people get, as it's not trying to deceive you professionally, at least for now.
  - MBCook 2mo ago
    They are also assuming that the comparison is to a financial advisor and not either nothing or a relative/friend who may or may not give good advice.
  - traceroute66 2mo ago
    > the kind of financial advisor most people would find while looking at random Any regulated financial advisor will still go further and deeper than any LLM. For example, most (all ?) LLMs won't even consider or ask you about applicable jurisdiction, which could easily end up as dangerous and costly advice. Will an LLM do a proper client risk assessment ? Probably not. Will an LLM deal correctly with vulnerable clients or PEPs ? Unlikely. Will an LLM deal correctly with anything vaguely "complex" or contentious ? Definitely not. And again, the financial advisor is regulated. Which means you have recourse through the regulator, and the advisor will also have liability insurance. The LLM meanwhile ? Yeah, about that...
inigyou 2mo ago
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.
- donkey_brains 2mo ago
  That’s why that’s not the standard advice. It’s index stocks hedged with bonds. If you manage to buy at the “top” of your entire country’s economy, you’ve got bigger problems at that point.
  - inigyou 2mo ago
    Buying after any previous crash, instead of before, gave you 10-20 years of extra retirement. If you waited 10 years in cash for a crash before going all-in, you came out ahead.
    - megapolitics 2mo ago
      Does that assume that you're able to perfectly time the investment with the market bottom?
      - inigyou 2mo ago
        Only within a few months. Buying soon after the crash versus buying soon before the crash.
    - blitzar 2mo ago
      Those that pick bottom get smelly finger
- ben_w 2mo ago
  IIRC, "Buy index funds. The end."
  - inigyou 2mo ago
foxtrot8672 2mo ago
"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.

aprilthird2021 2mo ago

> 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. What will AI do when those rules, which it's trained on their repetition so much, don't apply anymore? ~8% annual stock gains for the next 40 years may not hold and an 80/20 stock/bond ratio may not be as wise in upcoming decades

toomuchtodo 2mo ago
Models can be updated when foundations domain knowledge graphs are built on change. As of this comment, target date funds and pensions containing trillions of dollars adhere to the assumptions you mention (asset class allocation, growth rate and return assumptions, safe withdrawal rates ["Trinity study" aka ~4%/year], etc), and so consumers of AI provided guidance assuming these foundations could do much worse (as they already do today due to lack of information, knowledge, will, etc). You literally just need to stick the Bogleheads forum into your AI assistant of choice for most folks, if they'll listen (which is the hardest part, imho, people want to gamble, not invest, in my experience). Prompt "What is your age?" respond "Optimal target date fund is 20XX fund based on your current age and retirement age, please confirm to set to default for investing." I suppose this will eventually make its way in some form into every banking, fintech, and brokerage mobile app chatbot in some capacity. https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card If you want to get fancy, crib off of California's now mandatory high school financial literacy curriculum for grounding. https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB2927 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... ("computah, teach me how to personal finance and invest")
- foxtrot8672 2mo ago
  Context mangement is necessary to fully realize the power of AI financial advice. Memories, financial history, and decisions need to made with the AI. This translates into the epistemic record of every answer and its how we do it. This allows us to precisely repeat AI experiments with a given set of inputs and is necessary to ensure a high quality output. The paper talked about how an AI informed the usr to build a financial emergency fund. but, when the user lost their job, the AI completely forget it existed. This proves our theory that context management is the key to unlocking the full potential of AI financial advice.
mjr00 2mo ago
Stock/bond ratios are way too advanced for what's qualifying as good advice here: > AI consistently advised people to save during their working years, draw down savings in retirement, invest heavily in diversified stock funds, and reduce stock exposure after age 45. This is analogous to saying to an aspiring software developer, "You should write clean and testable code, have clearly defined API boundaries, and a repeatable build process." All very true, but also so general and basic that it's not helpful.
- grg0 2mo ago
  Right, that's the 'what', but not the 'how'. > Prompt: but I don't have enough money to save, I can barely make ends meet. > AI: I see the problem now---If you don't have enough money to save, and reducing your expenses is not an option, then the answer is clear: make more money.
  - bdangubic 2mo ago
    AI is right on the money here (pun intended)
  - anigbrowl 2mo ago
    I don't know why you're being downvoted here. A huge amount of 'financial advice' boils down to 'stop being poor,' which is to say it's about what to do with your economic surplus rather than what to do if you don't have one and aren't long on avocado toast.
    - sheepolog 2mo ago
      I didn't downvote them, but I am genuinely curious to hear from people who "can't save money", and try to understand why that's the case. My assumption is that a large percent of them are spending way more than they need to, but that could easily be an incorrect stereotype.
      - singpolyma3 2mo ago
        It's actually almost certainly true just on the basis of basic numbers. Many people who are really actually quite poor (making say under $35k CAD annually for a family of 5) manage to make ends meet and even save a little. So if you make more than this but can't save any it's because you're spending on things they are not and which are therefore nonessential. Now maybe restaurant food, name brand groceries, driving two SUVs, vacations, etc etc whatever it is for a given person are seen as essential. That's how lifestyle works after all and we often can't imagine our lives without it. So I'm not saying it's a "simple" matter of just spend less because it's often not very simple feeling. But from a numbers PoV it is possible for most people who otherwise see themselves as struggling in theory.
gloryjulio 2mo ago
Investing and trading is a dynamic game. If everyone has the edge of certain portfolio to out perform the average, then no one has the edge. Similarly AI is not going to solve that. Because everyone would end up with similar AI edge until no one has the edge. People should start with simple universal rules: Stay invested. Buy low cost diversified etf fund. Favor long term investment instead of trading. Learn something from all weather portfolio composition to hedge the risks.
- inigyou 2mo ago
  When everyone is crowding into one investment that investment tends to get irrationally over-saturated. With the current makeup of the S&P500 we can predict it will dramatically crash in real value in the next five years.
  - kasey_junk 2mo ago
    That’s why the classic investment advice is to hedge your exposure to the equities markets, do more so the closer you get to retirement and don’t put money you need in the next 7 years in equities. The bigger concern with the classic advice is that bonds have become more correlated with equities and our backtesting was all done during a time period where the American liberal international economic system was dominant so we aren’t sure that it will hold up to the new partitioned order.
  - gloryjulio 2mo ago
    [dead]
epolanski 2mo ago
Sound financial advice is not "go all in on SP500". Albeit that's more sensible than what the overwhelming majority of retail investors do. Sound financial advice takes into account the financial situation, time spans, goals, risk adversity, etc.

kccqzy 2mo ago

This is the common fallacy of “AI is terrible in my own field of which I have deep knowledge, but AI is totally fine in this other field of which I only have cursory knowledge.” Even ignoring all other aspects of financial advice and only focus on saving for retirement, there are so many topics involved like asset allocation glide paths, tax advantaged accounts, safe withdrawal rate, sequence of return risk, etc etc. Financial advice is universally agreed upon, to the same extent that advice about software engineering is also universally agreed upon, you know, like write unit tests, write maintainable code, etc. But the devil is in the details.

hibikir 2mo ago
You are comparing to the almighty, not to the kind of financial advisor most people would find while looking at random. Between those with very high AUM fees, those selling bad vehicles that they get kickbacks for and such, people are basically getting robbed already. It's not that one cannot get very specific, technical advice that helps, but someone without much financial literacy cannot tell someone doing honest work for a reasonable price from easy to find scammers with a marketing budget. The AI isn't going to get everything right, and it's not going to be easy to send good, proding questions to double check things without sufficient financial literacy, but that boring baseline is miles ahead of what most people get, as it's not trying to deceive you professionally, at least for now.
- MBCook 2mo ago
  They are also assuming that the comparison is to a financial advisor and not either nothing or a relative/friend who may or may not give good advice.
- traceroute66 2mo ago
  > the kind of financial advisor most people would find while looking at random Any regulated financial advisor will still go further and deeper than any LLM. For example, most (all ?) LLMs won't even consider or ask you about applicable jurisdiction, which could easily end up as dangerous and costly advice. Will an LLM do a proper client risk assessment ? Probably not. Will an LLM deal correctly with vulnerable clients or PEPs ? Unlikely. Will an LLM deal correctly with anything vaguely "complex" or contentious ? Definitely not. And again, the financial advisor is regulated. Which means you have recourse through the regulator, and the advisor will also have liability insurance. The LLM meanwhile ? Yeah, about that...

inigyou 2mo ago

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.

donkey_brains 2mo ago
That’s why that’s not the standard advice. It’s index stocks hedged with bonds. If you manage to buy at the “top” of your entire country’s economy, you’ve got bigger problems at that point.
- inigyou 2mo ago
  Buying after any previous crash, instead of before, gave you 10-20 years of extra retirement. If you waited 10 years in cash for a crash before going all-in, you came out ahead.
  - megapolitics 2mo ago
    Does that assume that you're able to perfectly time the investment with the market bottom?
    - inigyou 2mo ago
      Only within a few months. Buying soon after the crash versus buying soon before the crash.
  - blitzar 2mo ago
    Those that pick bottom get smelly finger
ben_w 2mo ago
IIRC, "Buy index funds. The end."
- inigyou 2mo ago

foxtrot8672 2mo ago

"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.