Financial misconceptions carry direct economic costs, from panic selling to equity market avoidance, yet they are notoriously resistant to correction. Traditional financial literacy interventions are constrained by cost, reach, and a persistent gap between knowledge and behavioral change. Across three pre-registered studies, we find that purposefully designed LLMs can durably correct financial misconceptions. Critically, two factors are necessary for this effect. First, corrective intent: LLMs prompted only to discuss a misconception produce corrections no better than unassisted self-reflection, and undirected LLM conversations can actively entrench misconceptions. Second, recipient receptivity: financial concepts are often foreign to the investors who misapply them, and LLM responses pitched below a participant's financial sophistication are judged as less credible and produce substantially weaker corrections. LLMs thus offer a scalable alternative to traditional financial literacy intervention, but only when designed with both factors in mind.
@article{arxiv.2604.27022,
title = {Breaking Bad Financial Habits: How LLM Conversations Correct Financial Misconceptions},
author = {Jillian Ross and Eric So and Andrew W. Lo},
journal= {arXiv preprint arXiv:2604.27022},
year = {2026}
}