How AI Impact Teaching Future Financial Leaders

Artificial Intelligence and ChatGPT are changing how universities teach future financial leaders. Students need to learn how to use AI and ChatGPT properly, understand AI’s limitations and know when they can appropriately use AI.

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According to Anthony Cardillo, more than 77% of companies are either using or exploring the use of AI. In fact, a number of companies have signed enterprise-wide site license agreements to use ChatGPT. Universities teach Excel skills because employers expect finance graduates to have Excel expertise. As more employers use AI, employers will expect college graduates to know how to effectively use AI tools as well. A accurate survey by ResumeBuilder found that over 90% of business leaders want workers with ChatGPT experience.

Because Gen-Z has grown up using personal computers and cell phones, this generation is comfortable using technology and using the internet to find answers. However, absent guardrails, current college students can use AI and ChatGPT improperly.

Universities expect students to submit original work. Work done using AI and ChatGPT is not original work. If a student characterizes work done using AI and ChatGPT as their own or does not indicate that they used AI or ChatGPT to complete the work, that student is committing an academic integrity violation.

Many students prefer to learn by accessing materials online, instead of memorizing a physical or online textbook. With Google, YouTube, AI and ChatGPT, students can often find an answer to a problem quickly and easily. However, when using these online resources, students may not understand the concepts that underly their answers.

AI and ChatGPT can provide answers to a wide variety of questions and problems. However, the more ambiguous a question or problem is, the more likely it is that AI and ChatGPT will generate an incorrect answer. When I used ChatGPT to take a Bentley University Spring 2023 semester finance exam, ChatGPT only answered half of the questions correctly. Students using AI or ChatGPT may not be able to determine whether an AI generated answer is correct and may further assume that all AI generated answers are correct.

Instructors who are teaching the next generation of leaders should incorporate the following steps into their classrooms to help students with AI and ChatGPT.

Instructors should explain the circumstances under which AI and ChatGPT usage is acceptable. For example, students may use AI and ChatGPT when working on daily homework problems. Whereas students may not use AI and ChatGPT in term project work.

In addition, students should learn how to properly cite AI and ChatGPT usage. Instructors can easily include this type of information in a course syllabus.

Instructors should explain when the usage of AI and ChatGPT is helpful and when it may not be helpful. For example, in a Financial Modeling Course, ChatGPT was highly effective when writing VBA code for macros. Upon completion, a student could easily evaluate the VBA code to ensure that it worked as expected. Whereas ChatGPT was not effective for preparing a capital budgeting analysis in the same Financial Modeling Course. With capital budgeting, ChatGPT did not reflect opportunity costs and sunk costs correctly. When a problem is unambiguous, ChatGPT will usually generate a correct answer. Whereas, when a problem is ambiguous, ChatGPT is less likely to arrive at a correct answer.

When an answer is arrived at using AI and ChatGPT, students should be reminded to “sanity check” the answer for reasonableness.

Instructors should explain the concepts that underly each financial calculation and include conceptual questions in course exams. If a student does not understand the concepts behind a formula, memorizing the formula may not be useful. Students are more likely to misapply a formula that they do not understand.

For example, ChatGPT cannot determine the weighted average cost of capital (WACC) for a privately held company. Because the inputs needed to calculate a privately held company’s WACC are not readily available, qualitative judgement is needed to identify proper inputs.

Instructors can help prepare students for graduation by having them explain their answers during class. When a student explains an answer, that student is demonstrating knowledge of the underlying concepts.

In addition, all students benefit by practicing their communication skills. A study prepared by the Association for Talent Development found that a lack of soft skills, including communication skills, are a challenge in the workplace. Post graduation, future finance leaders will need to communicate to a variety of company stakeholders, including, peers, supervisors, senior managers, boards of directors, debtholders, shareholders.

As AI and ChatGPT continue to improve, teaching methods will continue to change to develop future financial leaders.

Certified Financial Planner (CFP): What It Is, How To Become One

Certified Financial Planner (CFP) is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement saving.

Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is awarded to individuals who successfully complete the CFP Board's initial exams, then continue ongoing annual education programs to sustain their skills and certification.

CFPs are there to help individuals manage their finances. This can include a variety of needs, such as investment planning, retirement planning, insurance, and education planning. The most important aspect of a CFP is to be a fiduciary of your assets, meaning that they will make decisions with your best interests in mind.

CFPs are all-encompassing, particularly when compared to investment advisors. CFPs will usually start the process by evaluating your current finances, including any cash, assets, investments, or properties, to come up with an estimate of your income and net worth. They also take a look at your liabilities, such as mortgages and student debt.

From this point on they work with you to come up with an individualized financial plan. For example, say you are nearing retirement, the CFP will create a financial plan that can see you through your retirement years. Or perhaps you have a child that will be starting college. The CFP can help create a financial plan to manage that cost.

A CFP is a financial adviser who has earned a certification that indicates in-depth knowledge of financial planning. The requirements to become a CFP are some of the most difficult and stringent in the financial industry.

All CFPs are held to the standard of fiduciary duty. That means they must always put your interests as a client ahead of their own. For example, if they would more money selling one product over another, but the product that made them less money was better for you, that is the product they must recommend.

A CFP's fiduciary duty is clearly laid out by the CFP Board and states "At all times when providing financial advice to a client, a CFP professional must act as a fiduciary, and therefore, act in the best interest of the client."

The board goes on to state that three duties must be met by an adviser with a fiduciary duty. These are (1) duty of loyalty, (2) duty of care, and (3) duty to follow client instructions.

Earning the CFP designation involves meeting requirements in four areas: formal education, performance on the CFP exam, relevant work experience, and demonstrated professional ethics.

The education requirements comprise two major components. The candidate must hold a bachelor's or higher degree from an accredited university or college. Second, the candidate must complete a list of specific courses in financial planning, as specified by the CFP Board.

Much of this second requirement is typically waived if the candidate holds certain accepted financial designations, such as a chartered financial analyst (CFA) or certified public accountant (CPA) designation, or has a higher degree in business, such as a master of business administration (MBA).

As for professional experience, candidates must prove they have at least three years (or 6,000 hours) of full-time professional experience in the industry, or two years (4,000 hours) in an apprenticeship role.

Lastly, candidates and CFP holders must adhere to the CFP Board's standards of professional conduct. They must also regularly disclose information about any involvement in criminal activity, questions by government agencies, bankruptcies, customer complaints, or terminations by employers. The CFP Board conducts an extensive background check on all candidates before granting the certification.

Even successful completion of the above steps doesn't guarantee receipt of the CFP designation. The CFP Board has final discretion on whether to award the designation to an individual.

The CFP test includes 170 multiple-choice on more than 100 syllabus related to financial planning. The scope includes professional conduct and regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning.

The various course areas are weighted, and the most accurate weighting is available on the CFP Board website. Further questions test the candidate's expertise in establishing client-planner relationships and gathering relevant information, and their ability to analyze, develop, communicate, implement, and monitor the recommendations they make to their clients.

Here's some additional information on the administration, costs, and scoring of the CFP exam:

Though a certified financial planner (CPA) and a chartered financial analyst (CFA) may sound similar, they are different certifications with different job functions and clients. A CFP works with individuals, often retail clients, helping them achieve their financial goals. This includes help in investing and retirement planning.

A CFA works with corporations performing investment analysis. CFAs focus on financial reporting, analysis, and portfolio management. They can trade financial products, such as derivatives, and help in mergers and acquisitions. CFA's usually work for investment banks and hedge funds.

If you are just looking to invest money in stocks and bonds, a CFP probably isn't needed.

If you are looking to manage your finances, investment choices, estate planning, and retirement planning, a CFP can help you with all of those needs.

A CFP is a step above a non-designated financial advisor and has demonstrated expertise in financial planning.

How much a CFP costs will depend on your specific needs.

On average, a CFP charges between $1,800 and $2,500 for preparing a full financial plan. You also should expect $4,000 for a flat-fee retainer or $250 per hour for hourly services.

No, CFP and CFA are not the same.

A CFP is a certified financial planner who provides financial planning advice to individuals. This includes help with investing, retirement planning, estate planning, and tax law.

A CFA is a chartered financial analyst who may work for an investment bank or hedge fund and performs financial analysis, modeling, trading, and portfolio management services.

No, a CFP is not equivalent to an MBA.

A certified financial planner (CFP) is qualified to advise individuals on financial planning.

The holder of a master of business degree has studied the way businesses operate.

The career paths differ. A CFP works in financial consulting or wealth management. An MBA may be a business manager, portfolio manager, financial analyst, financial strategist, or even an entrepreneur.

The CFP test requires a lot of preparation and covers a wide range of syllabus in depth. The best way to ensure you pass the CFP test is by preparing for it well in advance and sticking to a study schedule.

Becoming a CFP takes education and experience, as well as a strong grasp of financial ethics. The test to gain this distinction is comprised of 170 questions and is split into two three-hour sessions.

Even if candidates pass the test and meet all the requirements, the CFP Board still has the final say about whether to award this distinction. Given the stringent requirements, CFPs can be assumed to have an in-depth understanding of financial planning.

Journal of Financial Education

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