ChatGPT Triggers Robo-Advisory Market Explosion, Projected To Increase 600% In 2029

ChatGPT is now used to choose shares. (photo: x @republic)

JAKARTA As it approaches its third anniversary, ChatGPT has now been used by at least one in ten retail investors to choose stocks. This phenomenon prompted a robo-advisory (automatic financial advisory service) market explosion, although its users still admit that this strategy is at high risk and has not been fully able to replace traditional advisors.

Thanks to artificial intelligence (AI), anyone can now choose stocks, monitor their movements, and obtain investment analysis that was previously only accessible to large banks or institutional investors.

According to Research and Markets data, the robo-advisory market, which includes fintech, banks, and wealth managers, is projected to grow from USD 61.75 billion in revenue last year to USD 470.91 billion in 2029 a jump of around 600%.

Jeremy Leung, a former UBS analyst with nearly two decades of experience, admits that he now relies on ChatGPT to choose shares in his portfolio. I no longer have access to expensive services like the Bloomberg terminal. ChatGPT is quite helpful, although there are still weaknesses because I can't access the data behind paywall," he said.

This trend is getting more massive. An eToro broker survey of 11,000 global retail investors showed that around 50% of respondents were willing to use AI such as ChatGPT or Gemini to compile a portfolio. In fact, 13% of them are already actively using it. In the UK, the Finder survey found 40% of respondents used chatbots and AI to manage personal finances.

Even so, the risk remains great. And Moczulski, the Managing Director of eToro in the UK, reminded that a generic AI model like ChatGPT or Gemini is not a crystal ball. According to him, it is better to use an AI platform specifically trained to analyze the market. The generalized AI model can misquote data, bias on certain narratives, or depend too much on past price patterns," he said.

Interestingly, when Finder asked ChatGPT in March 2023 to compile a portfolio containing high-quality company shares, the results were quite impressive. Of the 38 selected stocks including Nvidia, Amazon, Procter & Gamble, and Walmart performance jumped nearly 55%, outperforming an average of 10 of England's most popular mutual funds (such as Vanguard, Fidelity, HSBC, and Fundsmith) of about 19 percentage points.

However, users emphasize that this success requires a mature financial understanding. Leung, for example, often gives specific instructions to ChatGPT with a prompt like: Think you're a short analyst, what's the reason for selling this stock? or use only credible sources like the SEC report.

Although the global market is bullish with the STOXX 600 index rising nearly 10% this year and the S&P 500 surging 13% after growing 23% in 2024 risk remains. Leung reminded, If people are comfortable investing using AI and feel they are constantly profitable, they can be overwhelmed when the crisis or the market falls.