A Financial Planner Takes ChatGPT for a Test Drive

Impressed and eager to shave hours off the time it takes me to create 5-10 articles each month, I decided to try having ChatGPT write my articles. My hope was that the app could create a well-written article on any financial topic of my choosing, and I would just spend a few minutes editing to inject my own voice and color into the piece.

Since I was planning to write an article on the tax law changes ushered in by the SECURE ACT 2.0, which was signed into law in December, the first question I posed to ChatGPT was:

Write an article highlighting the tax law changes in SECURE Act 2.0 that may apply to individual investors.

Before my eyes, the app immediately began composing. Within about a minute and a half, ChatGPT had composed a reasonably well-written, intelligent-sounding article with a clear introduction, a list of six changes brought by the Act, and a concise summary. Here is ChatGPT’s entire response:

I was blown away. For a brief moment, I allowed myself to gleefully rejoice at the prospect of having countless hours of newfound free time… and then I read the article more carefully. Much to my chagrin, the article, which was intended to inform readers of important new tax rules, is a work of fiction. Here are the line-by-line corrections:

1. The IRA contribution limit for 2023 has increased from $6,000 to $6,500 for taxpayers under age 50 and from $7,000 to $7,500 for taxpayers age 50+. These changes were unrelated to SECURE Act 2.0. In fact, these inflation adjustments were announced in October 2022 by the IRS well before SECURE 2.0 was enacted into law. SECURE 2.0 did establish automatic annual COLA adjustments to the existing $1,000 IRA catchup contribution, but that change will not go into effect until the 2024 tax year. SECURE 2.0 increased the age-50+ catchup contribution for qualified plan contributions from $7,500 to $10,000, but not until the 2025 tax year.
2. The original SECURE Act of 2019 eliminated the age restriction for IRA contributions for taxpayers with earned income. SECURE Act 2.0 had no bearing on this issue.
3. SECURE Act 2.0 increased the RMD age from 72 to 73 beginning in the 2023 tax year. The new law increases the RMD age to 75, but not until the 2033 tax year.
4. SECURE ACT 2.0 did not require retirement plans to offer lifetime income options to participants. The original 2019 SECURE Act requires qualified plan administrators to include life annuity and joint & 50% survivor annuity projections at least annually on plan participant statements. The projections are based on Department of Labor projections and employers are shielded from liability if participants’ actual annuitization rates are lower.
5. The SECURE Act 2.0 does not expand the saver’s tax credit. Instead, SECURE Act 2.0 replaces the savers tax credit with a contribution by the federal government directly to the taxpayer’s traditional IRA or other non-Roth retirement plan in an amount equal to 50% of the taxpayer’s annual retirement plan contributions, up to a maximum of $2,000 per individual. The matching contribution phases out based upon adjusted gross income between $20,500 to $35,500 ($41,000 to $71,000 for married filing jointly, and $30,750 to $53,250 for head of household). These limits are indexed to the cost of living for years after 2027.
6. ChatGPT’s statement that the penalty for early distributions from IRAs and qualified retirement plans has been increased from 10% to 40% for taxpayers under age 60 is baffling. It is pure fiction. The penalty remains at 10% for distributions of pre-tax income prior to age 59 ½.

The verdict

I once bombed an art history exam in college because I misread an important essay question that asked students to describe the sculpture in the iconic Greek Parthenon for the equally iconic and similar- sounding Roman “Pantheon.” This was unfortunate because the Pantheon is sculpturally devoid. In formulating my response, I was inventing Roman sculptures left and right in hopes of clawing out some partial credit as I kicked myself for apparently having skipped the class that discussed the Pantheon’s non-existent works. ChatGPT has followed a similar tack in responding to my query because it was making up tax law changes left and right. As I annotated, all six key provisions of SECURE Act 2.0 cited in my ChatGPT-composed essay were completely inaccurate.

When I finished my art history exam, I remember being horrified at learning from my classmates that I had misread the question. When I called the professor to explain my honest mistake and beg for some relief, the normally stoic professor, like my fellow classmates, howled with laughter. He thanked me for giving him an all-time great story to tell future generations of Williams art history students. I received a C-. That is the right grade for ChatGPT too. The writing style and organization were convincing enough to save it from a D or an F, but the substantive response to my query was total fiction.

ChatGPT has the potential to be a powerful content creating tool for financial advisors, but it whiffed badly at a basic facts-based assignment. For financial advisors who are considering using ChatGPT for content creation, don’t skimp on your editing and fact-checking. ChatGPT is not ready for primetime.

For comparison, here is the article I produced the old-fashioned way: How Will the SECURE Act 2.0 and Other Recent Tax Law Changes Affect You?

Sadly, it took hours rather than minutes to compose.

Want to Test Drive ChatGPT for yourself? The app is in beta testing, and consumers are encouraged to sign up for their own free accounts to help the app to continue to “learn.” Here’s the link.

John H. Robinson is the owner/founder of Financial Planning Hawaii, Fee-Only Planning Hawaii, and Paraplanning Hawaii. He is also a co-founder of fintech software-maker Nest Egg Guru.

Related reading:

Here’s What to Know About OpenAI’s ChatGPT- What It’s Disrupting and How to Use it. (Forbes)

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