The record breaking rise of ChatGPT

The computer program that talks back is taking over.

Netflix built a subscriber base of 1 million users in a mere 3.5 years following its launch, says statistics portal Statista. Twitter scored its first million tweeters in a snappy two years, Facebook its first million friends in a faster 10 months.

ChatGPT, the chatbot program that debuted near the close of 2021, landed its first million users within five days after its launch. In the two months following its launch, its subscriber base ballooned to more than 100 million users.

The bot’s runaway success is earned, say tech industry watchers. “The hype is warranted,” says Kemal Kvakic, Raymond James IT head of innovation.

What’s a chatbot?

A traditional chatbot is a computer program you can have a conversation with, through text messages or voice interactions. And for more than a decade they’ve filled commercial roles in customer service, mimicking human conversation, most often to answer a question you’ve asked.

Traditional chatbots depend upon “intent recognition.” The bot’s developers try to predict what you’ll ask and then program the bot with appropriate responses. If the bot can’t answer your question from what it’s been taught, it issues the all-purpose reply, “I’m sorry, but I don’t understand.” Congratulations – you’ve been chatbotted.

So, how does ChatGPT differ?

ChatGPT ups the ante.

Unlike traditional chatbots, ChatGPT’s doesn’t make simple matches between questions and preprogrammed answers. It digests vast quantities of data from across the internet, summarizes it, organizes it and taps into it to provide tailored answers just as a person would. And unlike other technologies, you can tell ChatGPT, “I didn’t understand that. Can you explain it another way?” And it will generate an updated response – one reflecting the entirety of your interaction with it so far.

It can even assume different identities. You can ask ChatGPT to explain something to you as if you’re an architect, a teacher or an 8-year-old, and it’ll respond accordingly. It can write computer code, poetry, lyrics and plays. It can generate images, audio and video. It’s so powerful, “The engineers who built ChatGPT don’t always understand why it provides the answers it does,” Kvakic says. And businesses have taken note.

Microsoft’s Bing search portal has already begun using ChatGPT to help enrich its platform. Microsoft’s total investment in OpenAI, the company behind ChatGPT, has reportedly reached $13 billion, and the company is leveraging OpenAI technology in Copilot, an AI-based assistant feature for Microsoft 365 apps.

Competition will surely grow in this space, says Kvakic, with more products integrating personal assistant-like capabilities quickly. Not to be one-upped by the likes of Bing, Google already has released its own advanced-AI chatbot, dubbed Bard.

In countless professions, the variety of generative AI driving ChatGPT could massively streamline associate training, customer service, code debugging and more. Imagine how this technology could create efficiencies – from cancer researchers who need to synthesize mountains of scientific data to legal teams who need to rationalize decades of case history.

With great power comes worry

For all its potential, ChatGPT and its emerging competitors pose risks. Concerns about information reliability and bias rest at the forefront of watchdogs’ worries, along with questions about the potential for deceptive deepfakes, copyright implications, privacy breaches and other uses by bad actors.

Not surprisingly, policy guardrails are pending. Several countries have enacted outright bans on certain types of AI systems, while U.S. policymakers are seeking public comment toward establishing rules to govern advanced AI systems in the states.

“We know AI regulation is coming,” says Kvakic. “The question is, how much?”

Facts and stats

• AI and chatbot technology have been a work in progress for nearly 60 years.
• The “GPT” in ChatGPT stands for “generative pre-trained transformer,” an AI technology developed by OpenAI.
• Early leaders of OpenAI included Sam Altman, Elon Musk, Reid Hoffman and Jessica Livingston.
• Microsoft holds a reported 49% stake in OpenAI.

Limitations and Unknowns

• Cybersecurity. Fraudsters may be able to use the tool to write convincing phishing messages.
• Objectivity. OpenAI's CEO has admitted that ChatGPT has shortcomings around bias.
• Regulation. AI regulation has already started to take shape, particularly in Europe.
• Competition. It’s likely that competing tools will continue to emerge in the months ahead.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

The psychological side of spending your retirement savings

Many investors worry about outliving their savings. As a result, they sometimes underestimate what they can comfortably spend in retirement.

For years, you’ve been saving and investing for retirement.

But what happens when you finally retire and it’s time to switch gears from saving to spending?

It turns out, many people are so focused on accu­mulating assets that they never really think about actually withdrawing the money. In fact, recent studies show that many retirees aren’t drawing down their retirement portfolios, opting instead to live on Social Security and the minimum required distributions (aka RMDs) so their portfolios can continue to grow. This may lead to unnecessary sacrifices in a retiree’s standard of living. After almost two decades in retirement, most cur­rent retirees still have 80% of their pre-retirement savings, according to research from BlackRock.

The problem with uncertainty

So why aren’t these retirees spending their nest eggs? Some may be spending as little as possible to leave behind a larger sum for their loved ones or philanthropic pursuits. But in many cases, it’s because they aren’t sure how to determine a sustainable withdrawal rate that accounts for their total lifespan. They worry about the “what ifs” retirement may throw their way and want to be prepared. You may be able to relate.

This latter group understands that over the course of a long-term retire­ment, inflation can erode sav­ings. Portfolio returns can vary, and healthcare costs can quickly escalate. And they may be con­cerned about outliving their savings – only 25% of baby boomers believe their savings will last throughout retirement, according to the Insured Retirement Institute. By spending less and allowing their savings to potentially grow in the early years of retire­ment, they hope to offset some of the uncertainty.

Collaborating with your financial advisor can help increase your confidence about having enough money to live comfortably in retirement. Just like in your working years, you can estab­lish a just-in-case cash cushion or line of credit that helps put you at ease. And having a sound distribution strategy in place – one that takes into account your income sources, lifestyle, asset locations and tax situation – can help you enjoy the retirement lifestyle you envisioned.

Withdrawing your money

When it comes to withdrawing your retirement savings, here are a few things to consider:

Organize your expenses: Three typical categories include essential expenses (think food, housing and insurance), lifestyle expenses (vacations, hobbies) and unexpected expenses (healthcare costs, auto repairs). Consider paying for your essential expenses with guaranteed income sources such as Social Security or annuities. Use growth or income investments to pay for lifestyle expenses, and maintain a cash reserve for any unexpected costs that might occur.

Be flexible. For instance, a downturn in the market is a good time to tighten the reins on your spending. But if you experience some unexpected invest­ment gains, the timing might be right for that dream vacation.

There’s little doubt your income needs will fluctuate during retirement. The early years may be filled with travel and other big-ticket items that require more sub­stantial withdrawals. As time goes on, you’ll likely travel less, but your healthcare expenses may increase. Studies show that spending tends to decline in the later years of retirement, most likely the result of less travel and similar pursuits. People ages 55 to 64 spend on average $60,076 per year, while people ages 65 and over spend $45,221, according to the Bureau of Labor Statistics.

Building in flexibility allows you to go with the flow. Just be sure to regularly touch base with your advisor so your budget can stay on track.

Review your plan. Work with your advisor to develop and review your retirement income and distribution strategies. You can run hypo­thetical simulations based on different withdrawal rates, how many years you will live in retirement or any other contingencies, which will allow you to develop a better idea of how much you can comfortably and confidently spend in retirement to help achieve your goals.

Everyone’s retire­ment situation is different. You may have encountered some unexpected circumstances, such as a layoff or forced retirement that occurred ear­lier than you planned, and you weren’t able to save as much as you hoped. On the other hand, leaving a legacy may be your primary goal. Whatever the case may be, establishing a withdrawal strategy that’s right for you – while also keeping your emotions in check – is often a good plan of action.

Sources: kitces.com; forbes.com; cnbc.com; ournextlife.com; smartaboutmoney.org; thestreet.com; kiplinger.com; myirionline.org

Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

The ins and outs of nonqualified deferred compensation

A versatile tool that can help enhance the benefits package you offer your employees.

What is an NQDC plan?

While nonqualified deferred compensation (NQDC) plans can vary slightly from one another, they generally act as an agreement between employers and employees to defer a portion of the employees’ annual income to a future date – that could be one year later or once the employee retires. Deferred compensation isn't counted as earned income, so it's not subject to taxes.

Who does an NQDC plan serve best?

NQDC plans are utilized by companies with a need to recruit, retain and reward key employees. They were created as a counteraction to the cap that high-earning employees face when it comes to government-sponsored retirement plans.

Highly compensated employees are often limited in retirement savings due to federal legislative limits. Participating in an NQDC plan can allow high earners to accrue additional pre-tax savings and tax-deferred growth. Employers can harness the tax deferring benefits of NQDC plans as an incentive to entice and retain top talent.

Nonqualified plans also offer more flexibility than qualified retirement plans in that savings can be accessed before an employee reaches retirement. While NQDCs are a popular component of a retirement planning strategy, deferred compensation can also be used in a variety of other situations: toward education expenses, to cover a home remodel, or even to supplement income during an extended period off from work. That said, nonqualified plans don’t simply function like a savings account. They require the employee to pick the distribution date they will receive their funds in advance. The main benefit here for employers is that it affords the freedom to offer plans to a more specific subset of employees, such as higher earners.

SECURE 2.0 Act changes

The SECURE 2.0 Act is a recent regulatory update designed to encourage more employers to offer retirement plan benefits through practices such as automatically enrolling eligible employees and allowing catch-up contributions, among other measures.

Most highly compensated employees take advantage of catch-up contributions in their qualified retirement plans, but things are about to change.

Starting in 2024, if the employee has income of at least $145,000 for the year, the catch-up contributions under 401(k), 403(b) or governmental 457(b) plans must be treated as a Roth contribution, which is a change to the current pre-tax contribution. That means these funds will be saved as after-tax dollars, no longer reducing taxable income but allowing for tax-free withdrawals in the future. Note that the $145,000 income threshold will also be indexed for inflation in future years.

An NQDC plan gives highly compensated employees the option to defer an unlimited amount of their income on both a pre-tax and tax deferred basis – providing greater flexibility with distributions.

For people with access to a nonqualified deferred compensation plan there’s a bigger question: Is it more beneficial to contribute the catch-up amount to the NQDC plan for the pre-tax deferral or a Roth contribution to the qualified retirement plan? Everyone’s circumstances are different, but a financial advisor can offer guidance.

What can business leaders do to prepare?

Recent legislative changes mean that, for companies and business leaders, now is a great time to review your benefit packages. If an NQDC plan is the right fit for your needs, it’s worth considering implementing one to help highly compensated employees effectively prepare for retirement.

Before you begin to leverage the flexibility NQDC plans offer, it’s important to weigh your options. NQDC plans can be a useful tax deferral tool, but there’s a strong likelihood that employees who qualify have maxed out their employer-sponsored retirement plan contributions. Therefore, offering different investment options from those typically found in a standard retirement plan can diversify employee retirement holdings and differentiate your NQDC plan as an enticing benefit.

Talk to your financial advisor to determine whether the addition of NQDC plan types could be beneficial for your business.

Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.

Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Chicken Saltimbocca with Spinach and Potatoes

SERVES
4 to 6
INGREDIENTS
1 pound chicken cutlets
1 teaspoon dried sage
1 teaspoon kosher salt, divided
1/4 teaspoon freshly ground black pepper
3 teaspoons olive oil, divided
12 ounces small red potatoes, cut into 1/4-inch-thick rounds
1 (6-ounce) bag baby spinach
1 clove garlic, minced
6 thin slices prosciutto
4 ounces fontina cheese, shredded

INSTRUCTIONS
Arrange a rack in the middle of the oven and turn on the broiler to high. Meanwhile, cook the chicken and vegetables.

Pat the chicken with paper towels, then season both sides of the cutlets with the sage, 1/2 teaspoon of the salt, and pepper.

Heat 2 tablespoons of the oil in a 10-inch or larger cast iron skillet over medium-high heat until shimmering. Add the cutlets in a single layer without crowding the pan, working in batches if needed. Sear the chicken until the bottom is browned, 3 to 4 minutes. Flip the cutlets and continue searing until the other side is browned and the chicken is cooked through, 3 to 4 minutes more. Transfer the cooked cutlets to a plate, tent with aluminum foil, and repeat cooking any remaining pieces.

Reduce the heat to medium and add the remaining 1 tablespoon of oil. Add the potatoes, season with the remaining 1/2 teaspoon salt, stir to coat with the oil, and arrange in a single layer. Cook until the bottoms just start to brown, 3 to 4 minutes. Flip with a spatula and continue cooking until lightly browned and tender, about 3 minutes more. Stir in the spinach and garlic and cook until just wilted, about 2 minutes.

Remove the skillet from the heat. Place the chicken on top of the vegetables in a single layer. Top each cutlet with a slice of prosciutto, then sprinkle with the cheese. Broil until the cheese is melted and bubbling, about 1 minute.

https://www.thekitchn.com/recipe-chicken-saltimbocca-with-spinach-and-potatoes-240607

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

From the Desk of Dale Crossley and Evan Shear

On behalf of our entire team, we would like to extend our sincerest gratitude to everyone who attended our 25th anniversary gala event. Our anniversary celebration at the Kennedy Space Center was a night to remember, and we hope that you enjoyed the event as much as we did. It was an absolute pleasure to celebrate such a significant milestone in our company's history with all of you. Seeing so many of our clients and their families come together to celebrate with us was such a joy.

As we reflect on the past 25 years, we are reminded of all the challenges we have faced and the successes we have achieved. We are grateful for the trust you place in us and truly appreciate the opportunity to work with such wonderful clients.  Seeing your success has been one of the most rewarding experiences for us as financial planners.

As we look to the future, we are excited about the opportunities that lie ahead. Our commitment to providing exceptional financial planning services remains unwavering. We will continue to evolve our services to meet the changing needs of our clients and provide the customized financial plans our clients depend on. 

We would also like to take this opportunity to thank our staff for their hard work and dedication to our company. Without their commitment, we would not be where we are today. We appreciate their contributions to our success.

Once again, we want to thank you, our clients, for entrusting us with your financial planning needs. Your continued support and referrals are what drive our business forward. We are honored to be a part of your financial journey and will always strive to exceed your expectations.

We look forward to many more years of working together and achieving financial success.

If you would like to view and download photos from the event, please visit CrossleyShear.com/gala.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.