What does AI make of DIY investors?
So while robo-advisers have been around for a while (and, to coin the late, great Ian Taylor, “involve neither robots nor advice”), the more traditional world of real-people financial advice has been making the news recently.
First, Vanguard announced that is closing its less-than-two-years-old financial advisory service. It seems their low-cost, low-frills service wasn’t generating much traction in the UK – even at an attractive 0.50% annual ongoing fee.
Secondly, Citi recently downgraded Hargreaves Lansdown to a ‘Sell’ rating, citing concerns about whether will be able to retain high-value customers “without a meaningful advice offering.”
So it would seem that even sophisticated DIY investors need financial advice, but there are fewer and fewer options available to them. We recognise the contradiction here – DIY investors are often the most cynical about the value created by advisers. Hence, we thought we’d ask the undisputed and impartial fountain of knowledge – ChatGPT – about when DIY investors might benefit most from seeking professional advice. Here is what it said:
“Do-it-yourself investors should consider seeking professional financial advice when:
1. They have a complex financial situation: If an individual’s financial situation involves multiple investment accounts, multiple sources of income, multiple debts, and a range of financial goals, then it may be beneficial to seek professional advice to develop a comprehensive financial plan.
2. They lack financial knowledge: If an individual lacks the financial knowledge and expertise necessary to make informed investment decisions, then seeking professional advice can help them make better investment decisions and avoid costly mistakes.
3. They experience major life changes: If an individual experiences significant life changes such as marriage, divorce, birth of a child, death of a spouse, or retirement, then seeking professional advice can help them adjust their financial plan accordingly.
4. They have limited time: If an individual has limited time to devote to managing their investments, then seeking professional advice can help them make the most of their investment portfolio.
5. They need a second opinion: If an individual has made significant investment decisions and is unsure if they are making the right choices, then seeking professional advice can provide a second opinion to validate their decisions or recommend alternative strategies.
Ultimately, the decision to seek professional financial advice should be based on an individual’s unique financial situation, goals, and level of expertise.”
While this is all just a bit of curiosity, we thought we would illustrate this article with an image of a Do-It-Youself robot generated from Dall-E, the AI image generator from OpenAI.
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