Q & AI

As a freelance financial writer, I was curious about the threat of my imminent obsolescence with the arrival of ChatGPT and similar generative AI chatbots.

ChatGPT portrait
Unofficial portrait of ChatGPT

In an informal experiment, I asked ChatGPT a few questions that are typical of the kind of questions I answer in my freelance assignments, which consist largely of topics in retirement investing and philanthropy. I drew up a list of questions, posed them to ChatGPT, and generated the answers below. Both the questions and the answers are unedited with respect to language content.

A brief general evaluation of the utility of ChatGPT appears at the end.

How should a philanthropic individual or family decide where to give?

Deciding where to give as a philanthropic individual or family can be a challenging task, but there are several steps you can take to make an informed decision:

Define your values and priorities: Before making any donations, it’s important to define what causes are most important to you or your family. This could be anything from education and healthcare to poverty alleviation or environmental conservation.

Research potential charities and organizations: Once you have a clear idea of your values and priorities, research potential charities and organizations that align with your interests. You can use resources like charity rating websites, news articles, and personal recommendations to create a list of potential organizations.

Evaluate the impact of each organization: Once you have a list of potential organizations, evaluate their impact by looking at their track record of success, the number of people they have helped, and any data they have on the effectiveness of their programs.

Consider the organization’s reputation and transparency: When evaluating organizations, consider their reputation and level of transparency. Look for charities and organizations that are open about their finances and operations and have a good track record of accountability.

Decide on a giving strategy: After researching and evaluating potential organizations, decide on a giving strategy. This could involve making one-time donations, establishing a recurring donation program, or partnering with an organization on a specific project or initiative.

Monitor the impact of your donations: Once you have chosen an organization or organizations to support, it’s important to monitor the impact of your donations over time. This will help you to determine whether your giving strategy is effective and whether you should continue to support the same organization or switch to a different one.

Remember, philanthropy is a personal choice, and there is no one-size-fits-all approach. By taking the time to research potential organizations and evaluate their impact, you can make an informed decision and ensure that your donations are making a positive difference in the world.

What makes employer sponsors of retirement plans like 401(k) plans dissatisfied with their plans?

There are several factors that can contribute to employer sponsors of retirement plans, such as 401(k) plans, feeling dissatisfied with their plans. Some common reasons for dissatisfaction include:

High administrative costs: Employers may be dissatisfied with the high administrative costs associated with maintaining a retirement plan. These costs can include fees charged by plan administrators, investment fees, and costs associated with compliance with government regulations.

Poor employee participation: Employers may be dissatisfied if their employees are not taking advantage of the retirement plan. Low participation rates can reduce the overall effectiveness of the plan, and may result in the employer feeling that they are not providing a valuable benefit to their employees.

Inadequate investment options: Employers may be dissatisfied if the investment options available through the plan are limited or not well-suited to the needs of their employees. This can lead to poor investment returns and frustration among plan participants.

Compliance and regulatory issues: Employers may be dissatisfied with the complex rules and regulations that govern retirement plans, including reporting and disclosure requirements. Failure to comply with these regulations can result in penalties and legal liability.

Lack of support from plan providers: Employers may be dissatisfied if they do not receive adequate support from the plan provider in terms of education and assistance in designing and implementing the plan.

Overall, employers are looking for retirement plans that are easy to administer, cost-effective, and provide valuable benefits to their employees. When employers feel that their plan is not meeting these criteria, they may become dissatisfied and may look to make changes to improve the plan.

What can financial advisors do to increase the assets they manage?

Financial advisors can take several steps to increase the assets they manage:

Build relationships: One of the most important things financial advisors can do to increase assets under management is to build strong relationships with their clients. This means taking the time to get to know their clients’ needs, goals, and concerns and providing personalized advice and recommendations.

Expand their client base: Financial advisors can also increase assets under management by expanding their client base. This can be done through targeted marketing campaigns, referrals from existing clients, and networking with other professionals.

Offer a range of services: Financial advisors can increase assets under management by offering a range of services that meet the needs of different clients. This could include investment management, financial planning, tax planning, and estate planning.

Communicate regularly: Regular communication with clients is essential for maintaining strong relationships and increasing assets under management. Financial advisors should stay in touch with their clients through regular meetings, newsletters, and other forms of communication.

Provide exceptional service: Financial advisors can differentiate themselves from their competitors by providing exceptional service to their clients. This means going above and beyond to meet their clients’ needs and expectations and providing outstanding value for the fees they charge.

Stay up-to-date: Finally, financial advisors can increase assets under management by staying up-to-date with the latest trends, strategies, and tools in the industry. This means continuing education, attending conferences and seminars, and networking with other professionals in the field.

How can retirees increase their cash flow in retirement?

Retirees can increase their cash flow in retirement through a variety of strategies, including:

Reducing expenses: Retirees can increase their cash flow by reducing their expenses. This can be done by downsizing to a smaller home, reducing transportation costs, and cutting back on discretionary spending.

Delaying Social Security benefits: Retirees can increase their Social Security benefits by delaying their retirement benefits. By waiting to start receiving benefits until age 70, retirees can increase their monthly benefits by up to 8% per year.

Working part-time: Retirees can increase their cash flow by working part-time in retirement. This could include consulting, freelancing, or working in a part-time job.

Using home equity: Retirees can increase their cash flow by using the equity in their home. This could include downsizing to a smaller home, taking out a reverse mortgage, or renting out a portion of their home.

Maximizing retirement account withdrawals: Retirees can increase their cash flow by maximizing their withdrawals from retirement accounts, such as 401(k)s and IRAs. This may require careful planning to ensure that withdrawals are taken in a tax-efficient manner.

Investing in dividend-paying stocks: Retirees can increase their cash flow by investing in dividend-paying stocks. This can provide a source of regular income while also offering the potential for capital appreciation.

Overall, retirees should seek the guidance of a financial advisor to help develop a comprehensive retirement income plan that takes into account their individual circumstances and goals.

What is the controversy surrounding ESG investments in retirement plans?

There is controversy surrounding the inclusion of Environmental, Social, and Governance (ESG) investments in retirement plans due to concerns about their performance, potential for conflicts of interest, and fiduciary responsibility.

Performance concerns: Some critics argue that ESG investments do not perform as well as traditional investments and can increase costs to plan participants. However, studies have shown that ESG investments can perform as well as or better than non-ESG investments, and that ESG funds can offer competitive returns while also reflecting the values of investors.

Conflicts of interest: Some critics argue that ESG investments are politically motivated and may not align with the best interests of plan participants. However, proponents of ESG investing argue that these investments can provide long-term benefits for investors and that they can be used to promote positive social and environmental outcomes.

Fiduciary responsibility: Plan sponsors and investment advisors have a fiduciary responsibility to act in the best interests of plan participants. Critics argue that ESG investments may not meet this standard, as they may prioritize social and environmental goals over financial returns. However, proponents argue that ESG investments can be used to mitigate risk and improve long-term returns, thereby fulfilling fiduciary obligations.

Overall, the controversy surrounding ESG investments in retirement plans reflects a broader debate about the role of social and environmental factors in investing. While some argue that these factors should be considered alongside financial returns, others maintain that financial returns should be the primary focus of retirement investing. As with any investment strategy, it is important for plan sponsors and participants to carefully consider their options and consult with a financial advisor before making investment decisions.

Why are there different share classes in investment options within retirement plans?

There are different share classes in investment options within retirement plans to accommodate the needs and preferences of different investors and to provide flexibility for plan sponsors.

Different share classes typically have different fee structures and expense ratios, which can impact the overall returns of the investment. Some share classes may have higher fees but offer lower minimum investments or more liquidity, while others may have lower fees but require larger investments or have longer holding periods.

For example, a plan sponsor may offer a fund with multiple share classes, such as Class A, Class B, and Class C shares. Class A shares may have higher upfront fees but lower ongoing expenses, while Class B shares may have lower upfront fees but higher ongoing expenses. Class C shares may have lower upfront fees but higher ongoing expenses and may be subject to redemption fees if sold within a certain period.

The different share classes may also offer different revenue-sharing arrangements, where some share classes may pay more in revenue sharing to the plan sponsor or recordkeeper than others. This can impact the overall costs and fees of the plan and should be carefully considered by plan sponsors when selecting investments for the plan.

Overall, the different share classes provide options for investors with different needs and preferences, as well as flexibility for plan sponsors to design retirement plans that meet the needs of their employees. It is important for investors and plan sponsors to carefully evaluate the fees, expenses, and revenue-sharing arrangements of different share classes before making investment decisions.

How can philanthropy round out the components of wealth management?

Philanthropy can round out the components of wealth management in several ways:

Providing a sense of purpose: Philanthropy can provide a sense of purpose beyond financial gain. It can help individuals and families to identify and support causes and organizations that are meaningful to them, and to make a positive impact in their communities and the world.

Fostering intergenerational wealth transfer: Philanthropy can be an effective tool for fostering intergenerational wealth transfer by involving younger family members in charitable giving and encouraging them to carry on philanthropic traditions.

Mitigating tax liability: Philanthropy can be an effective way to mitigate tax liability by allowing individuals and families to take advantage of tax deductions for charitable contributions.

Aligning values with investments: Philanthropy can help individuals and families to align their values with their investments by investing in companies and funds that align with their philanthropic goals and priorities.

Building social capital: Philanthropy can help individuals and families to build social capital by connecting them with other donors, nonprofit organizations, and community leaders who share their interests and values.

Overall, philanthropy can complement the other components of wealth management by providing a sense of purpose, fostering intergenerational wealth transfer, mitigating tax liability, aligning values with investments, and building social capital. By incorporating philanthropy into their overall wealth management strategy, individuals and families can create a more holistic approach to managing their wealth and achieving their financial and personal goals.

When you make a substantial philanthropic donation, what is the best way to monitor its effectiveness?

When making a substantial philanthropic donation, it is important to monitor its effectiveness to ensure that the donation is achieving its intended impact. Here are some best practices for monitoring the effectiveness of a philanthropic donation:

Set clear goals and metrics: Before making a donation, set clear goals and metrics for what you hope to achieve. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART). Use these goals as a framework for monitoring the effectiveness of the donation over time.

Establish reporting and evaluation processes: Work with the recipient organization to establish reporting and evaluation processes that will help you track progress towards your goals. These processes should include regular updates on the use of funds, the achievement of milestones, and the impact of the donation.

Engage with the recipient organization: Stay engaged with the recipient organization throughout the grant period to ensure that they have the resources and support they need to achieve the intended impact. This may include providing technical assistance, networking opportunities, or other forms of support.

Conduct site visits and other assessments: Conduct site visits and other assessments to gather firsthand information about the impact of the donation. This may include surveys, interviews, and other forms of data collection that can help you understand the effectiveness of the donation.

Share results and lessons learned: Share the results and lessons learned from the donation with stakeholders, including the recipient organization, other donors, and the wider philanthropic community. This can help to build a culture of learning and continuous improvement within the philanthropic sector.

Overall, monitoring the effectiveness of a philanthropic donation requires ongoing engagement, communication, and collaboration with the recipient organization and other stakeholders. By taking a proactive approach to monitoring and evaluation, donors can ensure that their philanthropic investments are achieving their intended impact and making a meaningful difference in the world.

General notes

What you see is what you get… Neither the questions nor the answers were edited at all, except to add boldface and certain paragraph breaks for readability.

The answers are generic but fairly accurate and could be better than much of what’s already being produced by humans. What is missing is flair, personality and vividness which are ordinarily shortcomings in these types of contexts. Another, more crucial, deficit is a sense of strategic guidance — of a thousand ways to describe something, which way is the one that will best advance the objectives of the people asking the questions?

This thing is fast. Hours of writing are produced in minutes or seconds. This of course devalues my writing because time is among my most finite resources.

The template formula is pretty obvious, but its outline is not necessarily bad:

    1. [The answer to your question] is done in several ways…
    2. A few bullet points
    3. An “Overall” recap.

Overall [!], ChatGPT is a marvelous resource for workaday explanations that are not really creative or engaging but at least reasonably accurate and plainspoken. It is difficult to imagine ChatGPT coming up with creative expressions or metaphors that make a piece of writing memorable. It feels like the clunky sort of writing that already plagues and will eventually flood LinkedIn and similar hellscapes of corporatespeak.

Comments? Contact me.