LLM-based Personalized Portfolio Recommender: Integrating Large Language Models and Reinforcement Learning for Intelligent Investment Strategy Optimization

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Authors: Bangyu Li, 博司 熊谷, Ziyang Ding
Cited by: 0

Abstract

In modern financial markets, investors increasingly seek personalized and adaptive portfolio strategies that reflect their individual risk preferences and respond to dynamic market conditions. Traditional rule-based or static optimization approaches often fail to capture the nonlinear interactions among investor behavior, market volatility, and evolving financial objectives. To address these limitations, this paper introduces the LLM-based Personalized Portfolio Recommender (L-PPR), an integrated framework that combines Large Language Models (LLMs), reinforcement learning, and individualized risk preference modeling to support intelligent investment decision-making. The proposed system comprises three core components: (1) a Conversational Financial Agent (FinAgent) that engages with users through natural language, gathers behavioral feedback, and delivers interpretable advisory explanations; (2) a Personalization and Risk Modeling Module that infers investor-specific risk tolerance using Bayesian inference and behavioral imitation learning; and (3) a Strategy Recommendation Engine based on Proximal Policy Optimization (PPO) that generates personalized asset allocation strategies conditioned on user embeddings and real-time market states. Experimental results on a simulated multi-asset portfolio dataset show that L-PPR substantially outperforms established baselines, including Mean–Variance Optimization (MVO), Deep Reinforcement Learning Portfolio (DRL-PPO), and BERT-based Financial Advisor (BERT-FA). Specifically, L-PPR achieves a 73.8% improvement in annualized return and a 33.2% reduction in maximum drawdown relative to MVO. It also records the highest Sharpe Ratio (1.45), Information Ratio (0.78), and User Alignment Score (0.89). These findings demonstrate that L-PPR effectively enhances risk-adjusted performance while delivering superior personalization and user satisfaction.

Fields of Study & Subjects

Stock Market Forecasting Methods Advanced Bandit Algorithms Research Explainable Artificial Intelligence (XAI)

Publication details

Journal / source
Fundamental Scientific Reports in Multidisciplinary Areas
Volume
2
Issue
02
Pages
300–310
Publication date
25 May 2026