AI in Financial Advisory: A Positive Evolution

The initial apprehension surrounding artificial intelligence (AI), and how it might replace financial advisors, is morphing into an inspirational phase of uncertainty. Advisors are gradually incorporating AI into their daily routines, utilizing it for tasks such as drafting emails or scheduling appointments. While AI can’t replace the essence of a personal relationship, it significantly enhances efficiency, enabling advisors to focus more on their roles as trusted financial guides.

Embracing technological advances, like artificial intelligence, that cater to the needs of the next generation provides powerful tools for advisors to engage with their clients. As AI becomes more affordable and accessible, advisors who capitalize on the opportunity will reap the benefits AI is expected to confer. AI can help monitor the health of client relationships by analyzing vast amounts of client specific data, incorporating performance metrics, advisor notes, frequency of contact, and many more variables to help advisors better retain relationships. Its capabilities will be used to monitor portfolios across a firm and alert you when a trend develops or if a portfolio falls out of line. These examples, merely the tip of the iceberg, illustrate a dynamic where advisors are not replaced but enhanced by AI.

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Although some advisors are already employing AI to help manage portfolios and setting retirement goals, its broader implementation holds the potential to revolutionize the industry. Beyond streamlining routine tasks however, I believe AI – with its futuristic nature – provides advisors another unique opportunity: to connect with the next generation of clients. With an estimated $68 trillion in wealth set to transfer from baby boomers to their heirs, engaging this demographic is paramount. Yet over 80% of the time, heirs seek different financial advisors after inheriting assets.1

Client retention is a critical aspect of the advisory business, and insights from various client demographics reveal that a significant factor contributing to client departure is inadequate communication and lack of personal connection. Clients often feel overlooked or believe that their specific needs are not receiving sufficient attention. It seems that the opportunity to engage with a client’s heirs is likely available but rarely taken outside of the context of their parents’ wealth. Armed with innovative solutions and engaging content tailored to millennials, on topics such as AI and autonomous driving, advisors can proactively engage with a client’s heirs. Direct interaction with heirs, coupled with addressing their specific needs, empowers advisors to retain this future business. The topic of artificial intelligence serves as a potent icebreaker for an engaging conversation with the next generation.

The integration of artificial intelligence into the world of financial advisory heralds a transformative era. Initially a perceived threat, AI emerges as a powerful ally, enhancing advisors’ efficiency and ability to personalize the client experience. As the industry stands at the cusp of a generational wealth transfer, advisors embracing technological advances, particularly AI, are poised not only to adapt but to thrive. AI’s ability to find meaning in vast datasets, monitor client relationships, and tailor engagement strategies for the next generation underscores its pivotal role. By addressing the evolving needs of heirs and ensuring a more personalized approach, advisors can fortify client relationships, foster trust, and navigate the dynamic landscape of finance with confidence. The journey forward involves not just embracing technology but leveraging it to forge deeper, more meaningful connections with clients, thereby shaping a future where artificial intelligence and human insight work in tandem to deliver unparalleled value for current and future generations.


For more of Jake’s thoughts click here.





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