We are nearly two years into the arrival of generative AI. How are financial advisors using this technology? And, how do they feel about it?
We attended Financial Planning’s Advise AI conference to get a snapshot of advisors’ relationships with generative AI. But we didn’t go in blind. Our agency makes extensive use of AI tools to magnify the human work of financial services communications and PR. For months, we have been in extensive conversations with financial advisors and leaders about how their businesses are thinking about and using AI.
(And, our founder Greg Matusky has interviewed a number of pioneers in his ongoing podcast series, The Disruption Is Now. Check it out!)
But where do things stand in 2024, as advisors turn over every stone in search for business growth?
‘Expedite, not automate’
The non-deterministic nature of generative AI means it can tackle challenges that classic, rules-based algorithms could not. But the necessity of winning compliance approval, and the time needed to train on these tools often present roadblocks to AI-curious advisors. A Financial Planning survey found only 33% of the 270 respondents felt generative AI was a high-priority item.
Michael Kitces’ remarks at the Advise AI conference crystallized the response we heard in our conversations with AI-savvy advisors. Advisors want something that will expedite their human-to-human work, not automate the entire client experience. In other words, they would prefer tools that get them 80% to the finish line instead of technology that purports to get them 100% through their work, which they would end up having to double-check!
In our experience, advisors are warming up to tools that keep them in the driver’s seat. Generative AI can summarize, predict, and otherwise get the ball rolling for advisors in entirely new ways. The firms that devote time to understanding this technology stand to win a competitive advantage over their competitors who do not.
Seizing next-generation opportunities
Growth is the elephant in the room with any discussion of generative AI. Financial advisors chase growth to scale their resources and market share against competitors. And increasingly, they look for new growth as a safeguard against client attrition through the Great Wealth Transfer. A Natixis Investment Managers survey found client retention drops by nearly half when wealth passes to the next generation in a household. When those clients leave, they have to go somewhere. In addition to systematic, ongoing prospecting efforts, forward-looking advisors look for ways to appeal to younger clients.
The use of artificial intelligence may be one of those difference-makers. Boosted.ai found 79% of young high-net-worth respondents would like their advisors to incorporate generative AI into the client experience. As younger cohorts become familiar with AI tools in their everyday lives, they may expect to see the same experience mirrored in the advisors who steward their financial futures.
It is still early innings with generative AI, but we are now at a point where advisors can see the technology for what it can already do for their practices. As these tools develop, we will be right there implementing them alongside our clients.