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Many Americans are turning to artificial intelligence<\/a> for financial advice.<\/p>\n But getting good or bad advice depends a lot on how well users write their instructions \u2014 or prompts<\/a> \u2014 to AI platforms. <\/p>\n “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<\/a> for Harvard University’s Griffin Graduate School of Arts and Sciences. <\/p>\n<\/div>\n Firstly, it’s important to note that AI has limitations when it comes to financial planning, experts said. <\/p>\n 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.<\/p>\n However, it struggles in other areas. Tax planning is a good example, Lo said. <\/p>\n 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. <\/p>\n “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. <\/p>\n AI can also sometimes provide wrong answers due to so-called “hallucination” of the algorithm, Lo said. <\/p>\n “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. <\/p>\n<\/div>\nThe limitations of AI for personal finance<\/h2>\n