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As artificial intelligence (AI) moves from the enabler to the adopter phase, expenditures are going to be significant. Recent earnings reports confirm as much and while that’s good for the enablers, that places some burden on the adopters to ensure they generate adequate return on AI-related investments.
That means use cases need to expand and emerge to drive AI adoption. Myriad examples indicate that’s happening and at the industry level, financial services is proving to be fertile territory for AI adoption. While AI still probably should not be used for complex financial issues such as individual securities selection and some elements of asset allocation, it is proving useful in some forms for banks, insurance carriers and advisors, among financial services providers.
Alright, so it’s clear that AI is can be a boon for financial services companies and advisors, but what about customers/clients? Data confirm they’re using AI for a variety of personal finance functions and that good news for AI enablers as well as the financial services firms embracing the technology.
AI, Personal Finance Are Intersecting
Advisors that are mulling deeper AI integration in their practices should consider that it could be a great way of converting younger prospects into clients. The recent BMO Real Financial Progress Index confirms that AI is an increasingly prominent part of the personal finance landscape, especially among Gen Zers.
“Among the 37% of Americans using AI to help manage their finances, the most common uses include learning more about personal finance topics (49%), creating and/or updating household budgets (48%), identifying new investment strategies (47%), building savings (47%), and creating and/or updating their financial plans (46%),” according to BMO. “While AI is helping Americans manage some aspects of finances, around two thirds (64%) say AI cannot understand how emotions influence financial planning.”
Nearly 60% of those surveyed are using AI as a question/answer tool on specific financial topics and 40% use the technology for data analysis. Of those that have yet to make the AI/personal finance conversion, many are considering doing so.
“Nearly a third are considering using the technology to learn more about personal finance topics (32%), increase their savings (31%), find new investment strategies (29%), create and/or update their household budgets (29%) and financial plans (27%), and/or for retirement planning (27%),” adds BMO.
Good News for Advisors
The BMO survey reveals a couple of encouraging points for advisors. First, fears of AI replacing advisors continue to be allayed. Paul Dilda, head, U.S. consumer strategy, noted advisors have the human touch clients demand and desire.
Second, AI could make for a more informed client base, particularly among the younger folks that were fast to embrace the technology.
“58% of Gen Z believe AI can help people make more informed financial decisions and 55% are confident AI tools can help them make real financial progress,” concludes BMO.