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Don’t be alarmed by that headline because the robots aren’t coming for advisors’ jobs, but the reality is artificial intelligence (AI) will transform the business of financial advice. Over the long-term, that trend is likely to benefit both advisors and clients.
AI’s intersection with the advisory industry also represents a form of validation for this still young technology. Financial advice is an avenue for AI adoption – something technology investors are intensely focused on.
AI is on advisors’ radars, but broadly speaking, adoption is a different story. Many are taking a cautious approach and that’s understandable, but that pragmatism carries risk. Advisors that are slow to embrace AI could be left behind by technology-adept competitors and that’s something to ponder at a time when an increasing number of clients want advisors to be tech-proficient.
Fortunately, advisors don’t have to stretch to up their AI games. For the time being, the point emphasis should be generative AI – the most readily accessible, consumer-facing form of this disruptive technology.
Gen AI Has Implications for Advisory Biz
Generative AI is highly relevant in the advisory space and the good news is that it’s easy to understand.
“Generative AI refers to deep-learning models that can generate high-quality text, images, and other content based on the data they were trained on,” according to IBM.
Put simply, generative AI doesn’t build portfolios, select securities or displace advisors in client meetings, but it’s highly useful for easing the burdens of creating marketing content, social media posts and the like.
“Generative AI reduces the time and effort it takes to create content,” observes Fidelity. “Advisors have already started using LLMs for brainstorming and creating a framework or outline, but several of our interviewees said they find the final output produced by LLMs to have an odd tone and lack quality. We believe future versions will be much more sophisticated.”
Another area in which gen AI could be impactful is easing the transition to adding new services. Fidelity’s survey points out that more advisors want to add services such as health, wellness and bespoke offerings to clients, but leveraging standard technology to that effect can be time-consuming. AI eases those burdens.
“Traditionally, adopting new software has led to saving time, through automation, that can be allocated to new services. But Generative AI is different. Its generalized knowledge can help an advisor more easily add services outside their knowledge limitations,” adds Fidelity.
Yes, Gen AI Helps with Clients
For advisors that are new to AI, it might be surprising to learn that the technology can bring efficiencies to client interactions. While gen AI is still in its early innings, it’s advanced enough to help advisors decipher clients’ tones and even suggest topics of conversation.
“Today, LLMs are decent at interpreting intent and tone of conversations and they will likely improve. Already they can take on different personas –acting like a skeptical client that needs to be convinced to use an advisor or a nervous client that needs education and handholding – allowing an RIA to practice different communication tactics,” concludes Fidelity.
Bottom line: Generative AI can be a practice enhancer and it’s not a threat to an advisor’s primary functions. With that in mind, it’s time for advisors to investigate AI’s advantages.