No matter your financial literacy: Simplicity wins when choosing a fund

This study assesses the impact of GPT-4-generated fund prospectus summaries on investor comprehension and decision-making through an online experiment. A total of 305 participants were given summaries designed with varying levels of complexity, labeled as "easy" and "hard." The findings reveal that easy-to-understand summaries significantly enhance text accessibility by approximately 13% and investment willingness by 8%. This improvement is observed regardless of participants' self-reported or objectively measured financial literacy. The study also finds that individuals' selfassessed financial competence plays a more crucial role than their actual literacy in interacting with financial information and making investment decisions. These results highlight the capability of advanced language models like ChatGPT to simplify and condense complex financial disclosures, thereby potentially broadening investor participation and enhancing financial engagement.