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Does ChatGPT provide better advice than robo-advisors?

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  • Oehler, Andreas
  • Horn, Matthias

Abstract

We develop three investor profiles with different risk attitudes and consult ChatGPT and 17 robo-advisors to recommend an investment portfolio. We compare the recommendations with a benchmark derived from academic literature. ChatGPT's recommendations align with the three investor profiles and the benchmark. In contrast, only three out of the 17 robo-advisors come close to meeting the benchmark for all three investor profiles. Three robo-advisors fail to meet the benchmark for all investor profiles. Our findings reveal that ChatGPT provides better financial advice for one-time investments than robo-advisors. A policy implication is to clearly disclose that independent sophisticated chatbots can be recommended as a trustworthy source of information for retail investors.

Suggested Citation

  • Oehler, Andreas & Horn, Matthias, 2024. "Does ChatGPT provide better advice than robo-advisors?," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323012709
    DOI: 10.1016/j.frl.2023.104898
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    Cited by:

    1. Minh Tam Tammy Schlosky & Serkan Karadas & Sterling Raskie, 2024. "ChatGPT, Help! I Am in Financial Trouble," JRFM, MDPI, vol. 17(6), pages 1-39, June.
    2. Cardillo, Giovanni & Chiappini, Helen, 2024. "Robo-advisors: A systematic literature review," Finance Research Letters, Elsevier, vol. 62(PA).
    3. Ma, Feng & Lyu, Zhichong & Li, Haibo, 2024. "Can ChatGPT predict Chinese equity premiums?," Finance Research Letters, Elsevier, vol. 65(C).
    4. Ko, Hyungjin & Lee, Jaewook, 2024. "Can ChatGPT improve investment decisions? From a portfolio management perspective," Finance Research Letters, Elsevier, vol. 64(C).
    5. Beckmann, Lars & Hark, Paul F., 2024. "ChatGPT and the banking business: Insights from the US stock market on potential implications for banks," Finance Research Letters, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    ChatGPT; Robo-advisor; Fintech; Portfolio management; Financial advice;
    All these keywords.

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G50 - Financial Economics - - Household Finance - - - General

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