MIT's Andrew Lo Predicts AI Will Manage Investments Within Five Years

MIT's Andrew Lo Sees AI Ready to Run Your Money in Five Years

A year ago, Andrew Lo asked ChatGPT for its opinion on Moderna Inc., a biotech stock that soared during the pandemic era. The advice: sell. He didn't. The stock plunged. Now Lo, a finance professor at the Massachusetts Institute of Technology and leading AI expert, believes the same kind of technology that nailed the stock call could soon do far more. Not just dispense advice, but manage money, balance risk, tailor strategies -- and meet one of finance's highest duties: acting in a client's best interest. Within five years, he predicts, large language models will have the technical capability to make real investment decisions on behalf of clients.

AI will be ready to manage your money in 5 years: Andrew Lo

Andrew Lo, an MIT professor, predicts AI will soon manage investments. He believes AI could make financial decisions for clients within five years. Lo envisions AI agents working autonomously. These agents will act in the best interests of clients. Currently, Wall Street uses AI for basic tasks. Lo's vision sees AI meeting the fiduciary standard. A year ago, Andrew Lo asked ChatGPT for its opinion on Moderna, a biotech stock that soared during the pandemic era. The advice: sell. He didn't. The stock plunged. Now Lo, a finance professor at the Massachusetts Institute of Technology and leading AI expert, believes the same kind of technology that nailed the stock call could soon do far more. Not just dispense advice, but manage money, balance risk, tailor strategies-and meet one of finance's highest duties: acting in a client's best interest. Within five years, he predicts, large language models will have the technical capability to make real investment decisions on behalf of clients. Lo, 65, has long bridged the worlds of finance and technology. He co-founded QLS Advisors, a firm that applies machine learning to health care and asset management, and helped pioneer quantitative investing when it was still viewed as fringe. He believes that generative AI, despite its flaws, is fast approaching the capacity to parse complex market dynamics, weigh long-term risks, and earn the kind of trust typically reserved for human advisers. "This could be in the form of the so-called agent AI where we have agents that are working on our behalf and making decisions on our behalf in an automated fashion," Lo said in an interview. "I believe that within the next five years we're going to see a revolution in how humans interact with AI." The idea still sounds radical on Wall Street, where ChatGPT-style tools are mostly confined to junior-level work such as data collection and analysis. Yet Lo's vision goes beyond that: under the right regulatory guardrails, AI could evolve from a hard-working but rigid researcher to meet one of finance's highest bars: the fiduciary standard.