Financial literacy concept with AI

GPT's Financial IQ: Can AI Really Give You Better Money Advice?

Avery Sinclair in Business & Economy May 2025 • 4 min read.

"New research reveals how GPT-4 is acing financial literacy tests, raising the question: Are robo-advisors the future of financial planning?"

The world of finance is rapidly changing, and artificial intelligence (AI) is at the forefront of this transformation. From robo-advisors to AI-powered investment tools, technology is increasingly playing a role in how we manage our money. One of the most intriguing developments has been the rise of large language models (LLMs) like GPT (Generative Pre-trained Transformer), which are demonstrating impressive abilities in understanding and processing complex information.

A recent study has delved into the financial literacy of GPT models, assessing their performance on standard financial literacy tests. The findings are eye-opening, suggesting that the latest iterations of GPT, particularly GPT-4, possess a surprisingly strong grasp of financial concepts. This raises an important question: Could AI become a reliable source of financial advice for the masses?

This article explores the implications of this research, examining how GPT models perform on financial literacy tests, what this means for the future of financial advice, and the potential benefits and risks of relying on AI for financial decision-making.

How Financially Literate is GPT?

The study assessed the financial literacy of different GPT models using a series of single-choice test questions covering essential financial concepts. These questions were drawn from the 'Big Five' items and the Financial Literacy Baseline Survey, ensuring a comprehensive evaluation. The models tested included Davinci and ChatGPT (based on GPT-3.5) and ChatGPT (based on GPT-4).

The results revealed a significant disparity in performance between the different models:

Davinci and ChatGPT (GPT-3.5): Scored 66% and 65% respectively, only moderately outperforming a baseline score of 33% expected from random guessing.
ChatGPT (GPT-4): Achieved a near-perfect score of 99%, demonstrating a remarkable understanding of financial literacy.

This stark contrast highlights the rapid advancements in AI capabilities. While earlier models showed limited financial understanding, GPT-4 demonstrates an emergent ability to grasp and apply complex financial concepts. The financial literacy tests included questions about:

The Future of Financial Advice: A Blend of AI and Human Expertise?

The rise of financially literate AI models like GPT-4 presents both opportunities and challenges. While AI has the potential to democratize access to financial advice and empower individuals to make more informed decisions, it's essential to recognize its limitations and potential risks. Overreliance on AI without critical evaluation could lead to poor financial outcomes. It is very important to consult human financial advisor before implementing plans made using AI tools.

Everything You Need To Know

What specific GPT models were tested and how were they assessed?

The study evaluated different GPT models, specifically Davinci, ChatGPT (based on GPT-3.5), and ChatGPT (based on GPT-4). The testing used financial literacy questions from the 'Big Five' items and the Financial Literacy Baseline Survey. The aim was to assess how well these models understood and could apply financial concepts, a key aspect of determining if they could offer sound financial advice.

How did the different GPT models perform on the financial literacy tests?

GPT-4 achieved a remarkable 99% on financial literacy tests, showcasing an advanced understanding of financial concepts. In contrast, Davinci scored 66%, and ChatGPT (GPT-3.5) scored 65%. These scores are significantly different and demonstrate how far the models have come. This stark difference emphasizes the rapid evolution of AI and its increasing ability to understand and process complex information, which is crucial for providing financial advice.

What are the implications of GPT-4's high financial literacy score?

The implications of GPT-4's strong financial literacy are twofold. First, it suggests that AI could potentially democratize access to financial advice, making it more accessible to everyone. Second, it raises the question of whether overreliance on AI could lead to less-than-optimal financial decisions. It is very important to consult a human financial advisor before implementing plans made using AI tools.

What is the significance of using the 'Big Five' items and the Financial Literacy Baseline Survey?

The 'Big Five' items and the Financial Literacy Baseline Survey are used to assess understanding of fundamental financial concepts. These assessments use questions about topics like interest rates, inflation, and risk. They provide a baseline for evaluating how well AI models like GPT-4 understand and can apply key financial principles. Testing on these types of questions is a key aspect of determining if they could offer sound financial advice.

What are the potential risks of using AI for financial advice, and how can they be mitigated?

While GPT-4 shows promising financial literacy, it's important to consider the potential risks of depending solely on AI for financial decisions. These include the possibility of biased advice or the inability of the AI to fully grasp the nuances of an individual's financial situation. It is essential to consult a human financial advisor before making any significant financial moves. Combining AI's analytical power with human expertise is a reasonable approach for financial planning.