Nexus Asia - The Algorithmic Financial Advisor's Dilemma

September 4, 2025 Nexus Asia The Algorithmic Financial Advisor's Dilemma With rapid advances in AI, financial institutions and regulators are exploring how large language models can be used for financial advice. However, this introduces new principal-agent problems in both developing and deploying these models: platforms feel pressure to prioritize attracting new clients over focusing on long-term financial results, and the very scale that helps cut costs might weaken the market inefficiencies these systems rely on. Drawing on recent research in large language models, financial regulation, and fintech platforms, Professor Ben Charoenwong (UChicago MBA, PhD’17 Finance) will explore how standard economic theories shed light on these challenges. He will look at how the Lucas Critique affects the scalability and quality of AI advisory systems as they scale, discuss evaluation methods beyond traditional performance measures to ensure fiduciary standards, and consider the regulatory challenges of making algorithms transparent in markets where competitive edge depends on proprietary models. The key question isn't whether AI can offer better financial advice, but whether the incentives across the entire value chain—from developers to platforms to end users—align to produce advice aligned with fiduciary duties. Nexus Asia is a program initiated by the UChicago Hong Kong Campus dedicated to collaborating with UChicago PhD alumni and their institutions throughout the Asia Pacific region. In addition to facilitating research, Nexus Asia plans to engage its alumni on its UChicago Hong Kong campus with workshops, lectures and events for academics and the general public. Speaker: Ben Charoenwong (UChicago MBA, PhD’17 Finance) Associate Professor of Finance INSEAD ➡ Subscribe to our Enews: https://bit.ly/3fxp8JP Twitter:   / uchicagohk   Facebook:   / uchicagohk   Linkedin:   / uchicagohk   Instagram:   / uchicagohk   ▬ Content of the Talk ▬ Opening - 0:00 Speaker Introduction – 2:08 Ben Charoenwong's Sharing – 3:37 Discussion Session – 42:18