PODCAST EPISODE 267 – Will AI Replace Your Financial Advisor?

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0:05

Hello and welcome to your business, your wealth. My name is Paul Adams. And y’all, Corey Shepherd. Corey Shepherd has gone for just the next six weeks, because he had a baby yesterday morning. Now, I have sent him a question to ask mommy, if we could put baby on the podcast. I haven’t had an answer yet. So there might be a picture on the YouTube video right about now with a picture of that baby. But you guys are in luck as well. You do not have a new screaming baby at your house. You know what you do? Have? You have Jeff Miller, my friend, partner and a man who would have an amazing sound setup right now, if the founder of sound financial group and co host this podcast did not forget to order it for him. welcome Jeff Miller.

0:57

Next fall, it’s good to be here.

0:59

No while it has been a while I think episode 138 was the last one if you guys haven’t heard that, before Jeff Miller became an advisor. After he and his wife became clients and found out they had reached financial independence. And this done such a good job of saving and controlling their cash flows that they had made it but hadn’t noticed yet. So really fun story, highly encourage you guys to go listen, again, that’s episode 138 you can find on the podcast or you can find on YouTube. And the link will definitely be it’s either in the description or go to the page for this episode. And you’re going to find that but, Jeff, we are here to find out something incredible today. Which is am I going to lose my job as a financial advisors sound financial group going to have to fire its founder, because we no longer have need for financial advisors. Why do we not need financial advisors anymore? What’s replacing them?

1:58

Well, there’s this AI tool called Chat GPT and other tools out there that that purport to do the similar thing.

2:07

Yep. So we’re going to test chat GPT live their system open AI, and we’re going to see if it can answer questions better than a financial adviser can. And we’ll just see if after we record this episode, go ahead and put in the comments below. Should Paul be fired or not? For any reason, maybe just because chat GPT and open AI does not have facial hair, that might be enough for some people. So with that, let’s dive in. Now we’re using a little bit new piece of our tech here today. So we’re hopeful that this is going to work because we’re showing Jeff’s screen Jeff is running chat GPT for us right now. And I am going to have to shift my windows around a little bit, Jeff so that I can see it. So this is the login of chat GPT we did not know if it was going to work. In fact, it didn’t for like 2030 minutes, right, Jeff just trying to get this going.

3:02

Lots of traffic on the site. I don’t know that they’re scheduled to handle the volume of questions that GBT is getting these days.

3:11

Well, and here’s the great thing that does happen with Chad GPT is if you pay an extra $90 a month, you can pass the line. So that’s the best. Sometimes it’s down, sometimes it’s up. But if you really need AI, you can get this for $90 a month. Now a couple of quick things just in my reading about open AI and chat GPT so far, number one, you can get it to have conversations with you in a strand. So each question we put in is going to stack and remember the rest of that conversation. You can see some of the other ones that we have put on the left there. I think one of them was I was like how much is rancher, Wyoming? To see what it would do. But, Jeff, why don’t you do this first question that you put in here. And and then read off the answer for the audience.

4:00

Sure. So the first question we asked just a few minutes before the start of the show today is? Well, it’s a statement and a question. I have $2 million of investments, how much can I withdraw each year in retirement?

4:15

Now, if you’re a regular listener, you know, we teach 4%. So let’s see what Chad GPT has to say.

4:22

And the answer that came back is the amount you can withdraw from your investments each year in retirement will depend on a variety of factors such as your desired lifestyle, the inflation rate and investment returns. A commonly used rule of thumb is the 4% rule, which states that you can safely withdraw 4% of your investment portfolio in the first year of retirement and adjust the amount for inflation in subsequent years. So

4:56

correct answer. That’s right. Now, I’m going to say that that may here, I think one of the drawbacks of AI is going to be that there’s going to be some appeal to authority fallacy. I’ve got my 12 year old right now reading a book on logical fallacies. And of course, one of them is the appeal to authority fallacy. So I see this now, Chad GBT, that would be an accurate question, if I was doing my retirement planning, which at JpT doesn’t do is explain why it’s 4%, which only takes us like 45 seconds short little story resonates with a human being, like, Oh, that’s it. But we don’t have like the effect just for fun. Go, let’s put in a different question here. I warn Jeff, that you put me on a project like this, I’m gonna come up with just random stuff. We had some questions prepared for it. But let’s add. Why is it 4%? Let’s just see what it says. Like because of course, as an advisor, maybe you can give a factual answer with some authority. It’s 4%. But let’s say we just needed it to make more sense to us. And so we asked Chad GPT why can I only withdraw 4%? Let’s say, now some of these chat GPT is grinding on. Okay, rebind 4% Rules ensure your portfolio lasts throughout your retirement, which is typically assumed to be 30 years. If you take 4% Take it out for inflation, you have a high probability of not running out of money. I just want to say not the most comforting thing.

6:43

Well, what’s missing here, Paul is is any, I think, any explanation of volatility market volatility, yes. Right. Because if our over time, globally diversified academically allocated portfolio returns on average 8% per year. You know that that is not a straight line aid.

7:09

That’s right, yeah. So when we take out money while the markets down, we accelerate the erosion of our capital. But you’re right, there’s zero discussion of volatility in that at all. So let’s go back and take a look at so we got an answer. But I do like the end of this. It’s always a good idea to consult a financial advisor for a personalized plan. So thanks, Chet GBT, a little tilt to the advisors. And right here when I do this. We’re going to have the video team put a little sparkle in my to my wink and go ding. And I say leave that in, where I just told them that so that the audience knows how we do our editing. So let’s ask another question then. So that one very analytical answer. At least it gives a nod to the financial advisor. Let’s see. What’s the next question we had lined up?

8:08

We were going to request a response from one of the popular financial entertainers. Yes, hitters.

8:18

Yes. So let’s go this way. Can you answer both of those questions as Jim Cramer? Alright, so as an AI language model, I don’t have personal opinions or emotions, but I can try to imitate the speaking style of Jim Cramer and answer your questions. Jim Cramer would probably say less than 4% rule is widely accepted guidelines designed to help you ensure that your money lasts as long as you do. It’s a conservative estimate that takes into account variety of factors like inflation taxes a market fluctuate I don’t know how good of a Jim Cramer I do. But here’s the thing, he at least they got some of his stuff in there, like nest egg and long haul like they got a few of his lines. $2 million. Great start. It’s important. Remember, just just start solid plan managing your investments. That’s why I always recommend, even Jim Cramer, as played by AI says work with a financial advisor so far, looks like I’m not losing my job. The AI has at least twice and once while acting as Jim Cramer said you should work with an advisor. Okay. Let’s say let’s ask that that long, complicated question. Do you have that one handy about a 45 year old? And I’ve got this much money, let’s ask an actual financial planning question that could elicit a certain amount of help. Because I have a theory that I’m working on based upon some of our other things is that the problem with chat GPT is it’s never going to have the ability to advise those of you in the top 1%. And the reason it can’t advise people In the top 1%, it does not give us knowledge that’s particular to your level of income, or your level of wealth. Because most of what the AI is going to pick up is everything that is on the internet and most of what’s on the internet is targeting the greatest amount of people which are below 90% of household income. So we’re going to find that very much what Chad GPT gives us is the common sense. So we’re asking I’m a 45 year old man married to a 45 year old woman, we have two kids. We have two two year old twins make $400,000 year maxing out my Roth 401 K and I put 80,000 into a savings account last year. Can you build me a retirement plan show me exactly where to invest $80,000 a year to have a comfortable retirement. Now that seems like a pretty straightforward question all math. And here goes chat GPT. Okay, the first paragraph appears to be all just kind of general stuff. It’s like a definition of retirement plan, current income expenses, debt and future goals, like provide some general guidance. Man, Chet GPT is the best financial advisor marketing I’ve ever seen. Like Dave Ramsey doesn’t even say every time after he says something, go talk to an advisor. So so the best work of advisor create a personalized plan takes into account your specific financial situation goals that you want to walk us through that general framework. Jeff?

11:36

Yes, so Chet GPT says number one, determine your retirement goal. Establish a target retirement age and determine the amount of income you will need in retirement. This will help you determine how much you need to save each year to reach your goal. So working backwards from the ultimate amount of either spending you want to maintain during retirement or what is that nest egg that you’re that you’re aiming for.

12:06

Make sure you’re not giving the maximum amount. Even though we already said

12:10

employer employer sponsored retirement plan contributions if your employer offers a 401 K or similar plan, make sure that you’re maxing maxing out each year. diversify your investments consider a mix of stocks, bonds and other investments to help manage risk and maximize returns. A financial advisor can help you determine the right mix for your goals and risk tolerance. I would agree 100% with that statement. And number four, consider other savings vehicles. In addition to employer sponsored retirement plans and your savings account, consider investing in an individual retirement account an IRA or a taxable investment account.

12:55

So so far, so good, so well and what’s what I think it really points out is so far so good. So far so general so far so far total so far, so generic, common financial advice. So far, we haven’t done any better than the journalist writing about financial topics that doesn’t know anything about you. So far jet GBT is doing the same job. You know, I got kind of a fun one. I think we could do. Just do this. Type Paul Adams. actually write a 250 word article.

13:39

New chat

13:40

or right in here we’ll leave it right in the strand see what it does. A 250 word article on Paul Adams Yep, about Paul Adams. who founded sound financial group. I’m not so famous. We just put Paul Adams who founded sound finance group and hosts your business your wealth

on YouTube, and iTunes. Let’s see what it does. I’ll read this one because I think I’m gonna enjoy it. Paul Adams is a well known name in the financial planning industry. He’s the founder of sound financial group of financial planning and investment management firm and the host of your business your wealth of popular podcasts on YouTube and iTunes. Paul’s expertise in personal finance and investments has made him a sought after speaker and educated. He has dedicated his career to helping individuals and businesses make informed financial have decisions and achieve their goals. Through sound financial group Paul provides a range of financial planning services including retirement planning, investment management, tax planning and estate planning. In addition to his work at sound finance group Paul has built a strong following through his podcast your business your wealth. Each episode features in depth discussions on a range of financial topics from investment strategy to retirement planning. Paul’s engaging and approachable style has made him a popular voice in the financial community, and his podcast has become a must listen for anybody interested in personal finance and investment. So far, Chad GPT nailing it. Let’s see what they’re attributing Paul’s success to. Paul’s success can be attributed to his passion for clowning on other popular financial Just kidding, it doesn’t say that attributed his passion for financial literacy and his commitment to helping others. He has deep understanding the financial industry and is able to translate complex financial topics into practical actionable advice for his listeners and clients. Whether through his podcast speaking engagements or financial planning services, Paul is dedicated to making a difference in the financial lives of others. In conclusion, Paul Adams is a leading voice in the financial community known for his expertise in personal finance and investments through sound financial group in your business, your wealth, he is helping individuals and businesses make informed financial decisions, decisions and achieve your goals. Best bio ever. Miranda, throw that right up on the website, written by Chet GPT. I just want to end the episode now. Because that made me so happy but I got more questions for Chet GPT. While we’re here,

16:34

firewood ready?

16:35

How much would it cost? For me to live in an RV and travel the country? How much would it cost monthly to live in an RV and travel the country with a family of five? RV? Yep. With a family of five

16:59

and travel the country? Uh huh. There we go.

17:04

Here’s the main expenses. So again, it’s all generic. It’s not like it’s doing a quick research project, and giving us a cent a sense of what it would be. It’s just like, here are the things to think about. Now that you Oh, here, it finally gave us a two to $5,000 month, depending on our situation, that was more than I thought it was gonna give us.

17:28

Well, what’s missing? Is any question back? Right? Like there’s no interrogation of your specific situation? Well, sad, right? It gives you a bunch, it gives you a bunch of generic responses, because there are so many variables. But it’s not asking you, Paul. Well, how big is your RV? Do you have it? Have you financed it? Do you own it outright? All these types of things that are uncovered in a in a dynamic conversation? Person to Person?

18:02

What’s let’s ask this, let’s ask it for a rule. What is what is the good guideline? For how big of an umbrella policy I should have? We asked him about an umbrella policy and some testing earlier and it basically gives that generic million just get a million dollars, doesn’t ask you what your net worth is doesn’t give you any rubric of it should be, you know, 250% of your income or 10% more than your assets like we teach clients. Okay, let’s, let’s see what it tells us. Now. I think it’s still gonna give us that same generic info it gave us on the other one. So I gotta tell you, Chad GBT does, right, a little bit like a fifth grade student that’s trying to use up space. Like the beginning is an umbrella policy is the type of liability insurance provides additional coverage above and beyond the limits of your underlying liability policies, such as your auto or home insurance, the amount of umbrella coverage you need can depend on several factors like that first is like the fifth grade student go, man, that is awesome. That’s at least a paragraph I got for free.

19:07

Right? The reason why I’m writing this, this report on what I did for my summer vacation is because the teacher asked me to do that. And I’m hoping to get a good grade here.

19:19

Exactly. So it gave the same so that’s very telling is that Chad GPT basically gave us the same question, even though first time was with no information about us as the client, how much umbrella should I own? And it basically gave us the exact same answer as what is a good guideline of how big of an umbrella policy should on and it’s almost word for word. So here is I think the conclusion that we can make about Chad GBT and how it might affect our finances. Now AI overall, there’s one AI ETF right now that appears to just be crashing you No, it’s like 100% return last year, oh, maybe AI is gonna come in and do some of that, like a lot of industries AI is going to put us in a position that it will, at a minimum, save a certain amount of labor. I have a friend who designed his own AI may have to have him come back on the podcast and talk about it, I don’t want to give his name away. And this AI just works on his phone feeds to his servers, and is constantly gathering information and he was able to buy gifts for a group of friends. Because the AI said, these rare things that are not very expensive, are for sale. And three weeks ago, I heard you guys talking about this thing at your cigar get together. Like that is huge labor saving and allows AI to make the human more capable human being potentially. But at least so far, it’s not putting us in a position that we could use AI to do something as simple as the most basic financial plan. Now prior to this, we did things like how much I’m probably should have how much life insurance should I own. You don’t need to test it for all those guys. Like just go to any generic website giving that advice and chat GPT is basically doing the same thing. Will Be curious is how much and this is something I do wonder, Jeff, so you’ve got all the clicky journalism. So how much of the internet is just chock full of a very invigorating headline, and then an article that may or may not meet that. But the AI is chewing up all that information. And it may or may not be accurate, like how many people had misunderstandings of say, the Roth COVID Cares Act back in 2020. And would have missed a total opportunity if they relied on AI to try to design that. So Jeff, for you, what do you think is the biggest thing people should be thinking about with AI coming out it affecting their finances, etc? And I remember you sent me that article that might also be good to share with folks.

22:06

Yeah, so two things come to mind. Number one is just from a, from an investment opportunity standpoint, I would encourage everybody to just think about what happened with cryptocurrency over the past couple of years, and how we had a tremendous run up in in value. And then, you know, subsequent tremendous losses in account values around that. But as it relates to AI as a substitute for specific expert advice, specialized knowledge, specialized knowledge, be wary of of the responses that you get, like you were talking about earlier, Paul, you know, it’s just, it’s really just scraping everything that’s out there in, in the internet. Right. So it’s the old adage of garbage in garbage out? Yeah. And from what we’ve seen, over the last couple of weeks that we’ve been been playing around and testing and asking questions, is that what comes back is highly generic information. Information that I would say at best is applicable to the masses, the vast majority of the of the population out there. And the folks that that we typically engage with and help and provide the most valuable to valuable help to or not average, not average individuals, not average households, you know, they’re they’re highly successful business owners and and folks in the corporate domain, and the advice that you would get from an AI system is not going to help you. Yeah, sure. No,

23:56

not yet. Anyway. I mean, maybe it will. But it, I think that’s great, what you said there, and what a great note for us to end on is to be I think, use the term weary. But I would say you should, if something sounds interesting that you typed into chat GPT around how to handle your finances or investing or any of that. Probably one of the best things to do is to do the similar kind of research you would, if you had just read an article about something, you know, check and make sure it’s factual work with your advisor or coach, I mean, even even chat GPT open AI the most sophisticated public, conversational AI in the marketplace, every time we asked it a financial question requiring specialized knowledge, it always said, find a professional with that specialized knowledge. I don’t think that’s a mistake of chat GPT it is a big fat cya. Because they know it’s not going to give correct advice on things like that. And that’s why when you register To refer an account it walks you through all the things you should be suspect of, of what the AI will tell you about things. And what we’re going to do is try to bring you guys Anything new we see in the marketplace, anything new on the AI front. We’re going to have more as we watch this AI ETF perform in the marketplace and bring you an episode about it. But we hope in the meanwhile, that mainly you liked my bio that chat GPT did live. But second, we hope that this episode was contributed to you being able to design and build a good life

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