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How AI Is Changing the Financial Advisor Landscape


Like many other industries, banking and finance has leaned into chatbots and automation for several years now. While some of these tools have been helpful, by and large, they have tended to be rather clumsy prompt-and-response systems. That looks like it’s completely changed with the growth of generative AI. In the past year, AI has gone blown past simple chatbots and turned into the sophisticated platforms of Chat GPT and others. Users no longer have to fish around for questions and answers. Now AI systems can have entire conversations, build plans and anticipate problems. For the financial services industry, as with so many others, this will be transformative. However, it’s important to point out that the need for a financial advisor to help provide the guidance and expertise you need to grow real wealth isn’t going away anytime soon.

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Providing Customer Service

Expect an explosion in digital assistants. And, arguably for the first time, expect these features to be truly useful.  For years now, companies have tried to integrate automated customer service into their apps and websites. The idea is to create a product somewhere between a live person and an FAQ, all the help of a human with all the availability of a database. Customer response, though, has hovered somewhere around a dinner date with Clippy and the Borg. 

That may soon change. The current generation of AI is designed, first and foremost, as chat tools and finance have exactly the kind of questions that computers are best at answering. Whether you’re using banking software, an online brokerage or digital accounting, finance often falls into the area known as “high routine, high complexity.”

The issues might involve several steps or difficult problems (high complexity) but the correct answer is still the same every time (high routine). Whether you want to know what your banking options are, how to execute a short sale, or what you owe in taxes, chatbots may soon get very good at delivering those answers very quickly.

Advancement of Robo-advisors

Robo advising has already taken off, with services such as Betterment and Wealthfront have become quite popular among investors. You can expect that to accelerate.

A Robo advising service tends to offer two different products packaged in one. First, they generally have a series of portfolios built and balanced by algorithm. Those portfolios are relatively standard fund-based products, organized around specific goals or market segments. The main difference is that the system does most of the management, rather than an individual.

Second, these products tend to offer individual financial advice for investors. Generally, when you create an account, the system will ask questions about your needs, assets and goals. This will help make tailored financial recommendations based on the service’s various portfolios.

Expect this to expand significantly in the era of more sophisticated AI. As computers get better at learning and listening, they will get better at helping investors pick the right portfolios. They will also get better at creating the right portfolios, creating increasingly granular options based on an investor’s needs, eventually bounded only by trading and financial restrictions rather than technical ones. 

Overall Financial Planning

AI analyzing data for financial advisors

It’s unlikely that AI will replace financial advisors and financial planners. Investment is still a human activity, driven by emotion and uncertainty, which means that there are no “right” answers that a computer can solve. Judgment will remain essential.

Meanwhile, on the client’s end, trust is essential to this relationship. Financial decisions are a critical part of a client’s life. They are how someone prepares for retirement, buying a home, sending the kids to college or taking the family on a trip. This is not just about the numbers, it’s about trust.  

That said, financial advisors can use AI to streamline many of the routine elements of their practice. Any given financial practice has many steps that surround the actual process of making plans and giving advice and artificial intelligence systems will be very useful for making that quicker and more accessible. Advisors will be able to use AI to gather client information, skipping time (and money) consuming interviews.

Once a financial advisor has created a plan with their clients, an AI may be able to recommend a specific portfolio to match those goals. An AI system can help monitor a client’s portfolio based on a predetermined plan, balancing assets as the market changes without needing human intervention. If a client wants to check in on routine questions, an AI may be able to handle that level of customer service.

Artificial intelligence won’t replace financial advisors, but it might streamline the practice considerably. 

Research and Tasks

Speaking of which, it’s very likely that AI will become a valuable tool for financial advisors themselves. Above, we spoke of the key concept of “high routine, high complexity.” This refers to jobs that need a lot of work to do, but which have a consistent and knowable answer. Solving a very hard math problem is perhaps the classic example of high routine, high complexity. It will require a lot of effort, but the correct answer is the same every time. There are many areas of finance like this.

For financial advisors, research and analysis in particular fall into this category. Searching through the history of an investment or looking for patterns across huge sets of data takes time and effort, but the results are consistent and number-driven. This is exactly the sort of task that AI will be well suited for as it grows in complexity. The upshot is likely to be a surge in software tools that can save huge amounts of time for financial advisors, turning massive analytical projects into quick turnarounds. 

Bottom Line

AI technology helping financial advisors

Artificial intelligence is growing into a mature technology. It will change the landscape for financial services considerably, helping advisors transform their practice and profession. It’s important to understand how it can help you and what its restrictions might be before taking advantage of AI to help you with your overall wealth-building.

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