As artificial intelligence becomes more accessible, a growing number of retail investors are using AI chatbots like ChatGPT to choose stocks and manage their portfolios. While ChatGPT itself advises against relying on it for professional financial guidance, the trend is fueling rapid growth in the robo-advisory market.
Currently, around one in ten retail investors use chatbots for investment decisions, and about half are open to using AI tools such as ChatGPT or Gemini to adjust their portfolios. However, even those who actively use these tools acknowledge the risks involved and agree that AI cannot yet replace traditional financial advisors.
The robo-advisory industry, which includes fintech firms, banks and wealth managers offering automated financial advice, is projected to grow from 61.75 billion dollars in 2024 to 470.91 billion dollars in 2029, according to a data analysis firm.
Jeremy Leung, a former company analyst who spent nearly twenty years at a major Swiss bank, has been using ChatGPT to manage his multi-asset portfolio after leaving his job. “I no longer have the luxury of a Bloomberg terminal or those kinds of market-data services which are very very expensive,” Leung said. “Even the simple ChatGPT tool can do a lot and replicate a lot of the workflows that I used to do,” he added. Still, he cautioned that the chatbot may miss crucial information hidden behind paywalls.
Finder, a comparison platform, ran a test in March 2023 asking ChatGPT to select stocks from high-quality companies based on factors like low debt, consistent growth and competitive advantages. The selected basket of 38 stocks, which includes Nvidia, Amazon, Procter & Gamble and Walmart, has risen by nearly 55 percent in market . This performance beat the average of the United Kingdom’s top ten funds, including those from well-known investment firms, by almost 19 percentage points.
Despite strong markets and impressive returns, experts say AI-generated stock picks require financial knowledge. Leung shares prompts like “assume you are a short analyst, what is the short thesis for this stock?” and asks it to “use only credible sources, such as SEC filings.” He believes providing more context improves the results.
The main concern is that people may get overconfident using AI tools during a market upturn, but could struggle to manage their portfolios during a downturn.
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