JPMorgan is developing a software service called IndexGPT that uses artificial intelligence to select and analyze financial stocks tailored to client needs.. IndexGPT is inspired by ChatGPT, a text generation tool that has been making waves since its release late last year. ChatGPT is able to write essays, songs, code, do homework and much more, from a simple input sentence. It can also offer generic financial advice, but it’s not something that was created specifically to be a financial advisor.
IndexGPT, on the other hand, has been specifically designed to harness the power of cloud computing and machine learning to process vast amounts of data and find patterns and investment opportunities.. The service would target both individual and institutional investors, and would compete with other similar initiatives from banks such as Morgan Stanley or Goldman Sachs.
Are banks the dinosaurs that don’t know anything about technology? We hear that all the time in the crypto space. In this crypto space, supposedly the only innovation that counts is homemade. The banks, apparently, are obtuse who only want to slow down progress.
However, the evidence contradicts these assumptions. JPMorgan, for example, has a team of developers that works hard to create new things. Among them, IndexGPT that uses artificial intelligence to offer financial advice. Isn’t that innovative? In my opinion, it is a mistake to underestimate the big banks in the technological field. Banks also have talent, resources and vision to adapt to changes and surprise us with their solutions.
JPMorgan is one of the leaders in the use of artificial intelligence in the financial sector. According to its chief executive, Jamie Dimon, the bank has more than 300 AI use cases in production, in areas such as risk, marketing, customer experience and fraud prevention. In addition, it has a team of more than 1,500 data scientists and engineers specialized in this technology.
IndexGPT is just one part of JPMorgan’s AI ambitions. The bank has also created a model that analyzes the speeches of the Federal Reserve to detect possible changes in financial policy. It has also applied for a trademark for another product called InvestmentGPT, which the application says is “cloud computing software that uses artificial intelligence to provide financial and investment advice.”
Although it is not yet known when IndexGPT will be available to the public, the fact that JPMorgan has applied for the trademark indicates that the project is moving forward. However, we must not forget that artificial intelligence is not infallible, and robots can also be wrong.
Financial advisers have long feared the arrival of technology good enough to replace their role in the markets. However, those fears have not been realized so far.
Wealth management firms like Morgan Stanley and Bank of America’s Merrill offer simple robo-advisory services, but that hasn’t stopped their human advisors from capturing billions more dollars in assets. What will be the role of financial advisors after the advent of artificial intelligence?
Maybe they shouldn’t worry so much. Artificial intelligence can be very useful for analyzing data, generating reports, and offering recommendations based on algorithms. But suddenly, it cannot replace the human factor that implies trust, empathy and ethics.. Financial advisors can harness artificial intelligence to improve their efficiency and accuracy, but they must also bring their experience, intuition, and relationship with clients to the table. After all, money is something very personal and emotional, and not just a matter of numbers.
Now, financial advisors are survivors. They have been facing all kinds of challenges and difficulties for decades, from economic crises to unfair competition. And they are still there, ready to help their clients invest their money better.
But they don’t have it easy. In the age of index funds, which are investment funds that track the behavior of a given market index, many investors wonder if they really need an advisor or money manager. After all, Why pay commissions if you can invest in a fund that follows the IBEX 35, the S&P 500 or the Nikkei 225?
Warren Buffett, for example, has said that “Wall Street is the only place where people go in a Rolls Royce to get advice from those who go on the subway”. This expresses the rather widespread sentiment thate advisers and administrators are unnecessary. And, in many cases, they are seen as parasites. In fact, all this “democratizing finance” with rhetoric like the Robin Hood platform and the Reddit forums… goes in the same direction… That is, it seems, anyone can invest like a big bunch. Apparently we don’t need anyone.
However, despite these feelings and notions, there are still people who continue to trust other people. There are still investors who rely on other human beings. And there are also investors who continue to trust experts. Although these experts arrive by tube to advise their clients in Rolls Royce.
Why is this happening? What do financial advisers have that index funds don’t? Maybe it’s because financial advisors offer more than just a replication of the market. They offer a personalized service, adapted to the needs, objectives and risk profile of each client, but with a face. They offer support, guidance, confidence. They offer a global vision, a strategy, a diversification. They offer added value that cannot be measured by performance alone. In short, they offer a human relationship that cannot be replaced by an algorithm.
You don’t become an expert simply by using a tool and that’s it. It is good to learn and improve, but without devaluing talent and effort. Having a pencil doesn’t make us all Shakespeare. The future will benefit those who use AI best and marginalize others. I believe that in the future, people with more talent and ability to use AI tools well will achieve better results than people with less talent and ability. The optimal thing is to take advantage of the best of everything: use AI as a support, but not give up our human talent. No machine can ever beat a person using a machine
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