PLANSPONSOR - AI Has Potential to Improve Plan Design

Giuseppe Sette, president and co-founder of Toggle AI, says his firm is teaching large language models how to invest, educating the models on financial concepts that will allow them to better understand and analyze investment problems. In the distant future, plan advisers might be able to assign some asset management decisions to AI, which he dubs an evolved version of “robo-advisory.” He also considers creating a drawdown strategy in retirement “another incredibly fertile opportunity” for AI.

However, Sette cautions that there is no room for error when using AI in finance or retirement planning because of the strict regulations and compliance. After all, AI still has a propensity to “hallucinate,” or make up answers, or it could identify investment opportunities using incorrect or inaccurate criteria.

To avoid those problems, Sette says AI developers would need to narrow the intent and type of questions a user asks an AI-enabled tool, so that the AI system can understand what the user wants. Critically important is establishing safeguards to control what the model says back to the user.

Relying on AI for financial advice remains some time off, but Sette is clearly bullish on the progress already made.

“It’s easy to get Pollyannish, because it’s very likely the most exciting technology we’ve seen [in] the last—I don’t know, ever,” he says.

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