Evidence-Unit Fairness and the Limits of Query-Adaptive Sparse-Dense Fusion in Financial Document Retrieval

Financial question answering is typically evaluated by answer correctness, yet in SEC filings a plausible and even numerically correct answer can be grounded in the wrong evidence. Similar facts and disclosures recur across sections of a filing, across reporting periods of the same firm, and across comparable firms. FinRank targets this provenance-sensitive retrieval problem by requiring systems to identify evidence for the intended entity, reporting period, and disclosure context. The benchmark contains 1185 manually authored question-answer records over the 10-K and 10-Q filings of 22 companies. Each record includes a reference answer, gold supporting passages, and hand-curated hard negatives drawn from confusable passages within filings, across reporting periods, and across comparable firms. FinRank evaluates passage retrieval, reranking, and hard-negative discrimination as separately measured tasks. Baseline results demonstrate the difficulty of this setting: among the evaluated systems, even a 7B instruction-tuned embedder reaches only 44.8% Recall@10 on the pooled evidence corpus; sub-billion-parameter encoders gain at most 3.5 points over BM25, a finance-adapted embedder trails BM25 by 9.7 points, and pairwise accuracy falls by 13.0-20.5 percentage points when random negatives are replaced with the curated hard negatives. FinRank provides an evidence-first benchmark for developing financial question answering systems that are not only accurate but also grounded in the correct disclosure.

We study a parameterized hybrid ranker that fuses a dense embedding list and a sparse lexical list. The method has a small, explicit parameter vector: a dense prior $α\in [0,1]$, a score-versus-rank mix $λ\in [0,1]$, an RRF smoothing parameter $κ> 0$, optional list-geometry coefficients that move $α$ per query, and a router margin $τ$ that can turn sparse search off. We grid-search those ranges on SciFact train (809 queries) and freeze the chosen values on SciFact test (300). The tuned rank-score mix ($α= 0.8$, $λ= 0.75$, $κ= 20$) reaches 0.753 nDCG@10 and 0.889 recall@10, outperforming dense BGE (0.742 / 0.871) and equal-weight RRF (0.707 nDCG@10) on that test split. A list-conditioned $α$ adds +0.0006 nDCG; a sparse-off router is rejected by the same train split (any $τ$ that skipped approximately 50% of queries lost nDCG). These coefficients are dataset-specific. Equal RRF with the same models does not beat dense on a nine-zip BEIR macro-average (0.479 vs. 0.519 nDCG@10). Repeating the same train-then-freeze sweep independently on all 20 indexed units beats equal RRF on 20/20 and dense on 16/20 (unit-mean nDCG@10 0.467 vs. 0.462 dense vs. 0.420 RRF). Other corpora should reuse the ranges, not a copy of the SciFact point.

Retrieval-Augmented Generation (RAG) systems for financial document QA typically follow a chunk-based paradigm: documents are split into fragments, embedded, and retrieved by similarity. In structurally homogeneous corpora such as regulatory filings, this suffers from cross-document chunk confusion. Semantic File Routing (SFR), which uses LLM structured output to route queries to whole documents, reduces catastrophic failures but sacrifices targeted-chunk precision. We identify this robustness-precision trade-off on the FinDER benchmark (1,500 queries across five groups): SFR achieves higher average scores (6.45 vs. 6.02) and fewer failures (10.3% vs. 22.5%), while chunk-based retrieval (CBR) yields more perfect answers (13.8% vs. 8.5%). To resolve it, we propose Hybrid Document-Routed Retrieval (HDRR), a two-stage architecture that uses SFR as a document filter followed by chunk retrieval scoped to the identified document(s), eliminating cross-document confusion while preserving chunk precision. HDRR achieves the best performance on every metric: an average score of 7.54 (25.2% above CBR, 16.9% above SFR), a 6.4% failure rate, 67.7% correctness (+18.7 pp over CBR), and a 20.1% perfect-answer rate (+6.3 pp over CBR, +11.6 pp over SFR), simultaneously attaining the lowest failure rate and highest precision across all five groups. Beyond accuracy, HDRR is also the most efficient of the high-quality systems: it preserves CBR's compact per-query token budget (~5K-15K, an order of magnitude below SFR's ~50K-200K), incurs no indexing-time LLM spend (versus the one-time ~$100 cost of contextual indexing), and uses fewer per-query LLM calls than self-correcting agentic baselines, translating directly to lower API spend and inference-time energy at deployment scale.