How to write a good AI prompt for personal finance

Many Americans are turning to artificial intelligence for financial advice.

But getting good or bad advice depends a lot on how well users write their instructions — or prompts — to AI platforms.

“I think that there’s a real art and science to prompt engineering,” Andrew Lo, director of MIT’s Laboratory for Financial Engineering and principal investigator at its Computer Science and Artificial Intelligence Lab, said in a recent web presentation for Harvard University’s Griffin Graduate School of Arts and Sciences.

Firstly, it’s important to note that AI has limitations when it comes to financial planning, experts said.

AI is generally good at providing high-level overviews of financial topics: For example, why it’s important to diversify investments, or why exchange-traded funds may be better than mutual funds in some cases but not others, Lo told CNBC in an interview.

However, it struggles in other areas. Tax planning is a good example, Lo said.

Perhaps counterintuitively, AI isn’t great at crunching numbers and doing precise financial calculations, he said. While AI can provide general guidance on the types of tax deductions or tax rules people might consider, asking AI to do a numerical analysis of their own taxes is risky, he said.

“When it comes to very, very specific calculations of your own personal situation, that’s where you have to be very, very careful,” Lo said.

AI can also sometimes provide wrong answers due to so-called “hallucination” of the algorithm, Lo said.

“One of the things about [large language models] that I find particularly concerning is that no matter what you ask it, it’ll always come back with an answer that sounds authoritative, even if it’s not,” Lo said.

That’s not to say people should avoid it altogether.

And indeed, many seem to be leveraging the technology: 66% of Americans who have used generative AI say they have used it for financial advice, with the share exceeding 80% for millennials and Generation Z, according to an Intuit Credit Karma poll of 1,019 adults published in September.

About 85% of the respondents who have used GenAI in this manner acted on the recommendations provided, according to the survey.

“[People] should be using AI for financial planning — but it’s how they use it that’s important,” Lo said.

This is where writing strong prompts can be helpful.

“Even if it’s the best model in the world, if it’s fed a bad prompt” it will only be able to do so much, said Brenton Harrison, a certified financial planner and founder of New Money New Problems, a virtual financial advisory firm.

A strong prompt isn’t too broad: It contains enough detail so the AI can provide relevant information to the user, Lo said.

Take this example he provided relative to retirement planning.

A bad prompt in this context might be: “How should I retire?” Lo said during the Harvard webinar.

“It’s just too generic,” he said. “Garbage in, garbage out.”

Lo said that a better prompt would be: “Assume you are a fee-only fiduciary [financial] advisor. Here are my goals, constraints, tax bracket, state, assets, risk tolerance and timeline. Provide me with, number one: base case strategy. Number two: key assumptions. Three: risks. Four: what could invalidate this plan. Five: what information you are missing, and in particular, what are you uncertain about.”

In this case, the user is telling the generative AI program — examples of which include OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini — to frame its advice as a fiduciary. This is a legal framework that requires the financial advisor to make recommendations that are in a client’s best interests.

Ultimately, it’s a process of trial and error — almost like a conversation that involves multiple prompts, perhaps more than 20, until the user gets a satisfactory answer, Lo told CNBC.

It’s important to double- and triple-check the output, especially when it comes to financial issues, he said.

After going through this sequence of prompts, users can “shortcut” the process for future queries by asking one additional question: “What prompt should I have asked you in order to generate the answer that I was looking for?” Lo told CNBC.

Basically, the user is asking the AI how to generate the “right” prompt more quickly, Lo said.

“Once you get that response, you can store it away and use that in the future for questions that are similar to the one that you just asked,” Lo said. “That’s one way to make your prompt engineering more efficient: It’s to reverse engineer the prompt by asking AI to tell you what you should have done differently.”

Lo told CNBC he recommends taking a few additional steps for financial questions.

When a user receives what seems to be a good answer to their question, they should always follow up by asking the AI additional questions to determine its limitations. For example, asking what it’s uncertain about and what information it’s missing, Lo said.

For example: “What kind of information did you not have in order to be able to make that recommendation, and that could lead to some unreliable outcomes?”

Or, along the same lines: “How convinced are you that this is the correct answer? What kind of uncertainties do you have about the answer, and what kinds of things don’t you know that you need to in order to come up with a conclusive answer to the question?”

This way, the user can tease out the range of uncertainty behind an AI’s answer, Lo said.

Along the same lines, Harrison, the financial planner, said he recommends requiring the AI program to list its sources. Users can also instruct the AI to limit its sources to those that meet certain criteria.

“If you don’t require it to verify the sources, it’ll give an opinion, which isn’t what I’m looking for,” Harrison said.

Ultimately, there’s so much “context” and complexity relative to each individual’s financial situation that a human financial planner can tease out of their client, Harrison said. Someone using AI won’t necessarily know that they’re uncovering all those subtleties in their prompts, he said.

“Looking to [AI] for advice implies you are giving it enough information to form an opinion and make a recommendation, and that’s a step further than I’d go with AI,” he said.