Artificial intelligence is already reshaping the financial world, and it’s important that advisers understand both the opportunities and the challenges it brings. In this video, Professor Andrew Lo of MIT Sloan School of Management explores how large language models (LLMs) can be applied in finance, from analysing reports and spotting risks, to supporting decision-making and fraud detection.
He discusses:
- How LLMs can rapidly summarise financial statements and highlight risks, opportunities, and trends.
- Their ability to detect market patterns and anomalies – and the importance of human oversight to counter errors or “hallucinations”.
- The challenge of building trust in AI-driven financial advice, including how fiduciary principles and regulation might be applied to LLMs.
- Ways LLMs can support risk management, sentiment analysis, trading algorithms, and fraud prevention.
- The ethical and regulatory considerations that come with using AI in client-facing roles.
The message is clear: LLMs are powerful tools, but they are not replacements for human judgment. Instead, the future lies in combining AI capabilities with the professional expertise and regulatory responsibilities that advisers bring.
