Should Financial Advisors Be Concerned About AI?

Financial advisors excel at decision-making. Their clients rely on them for the insights they need to make informed decisions about investment opportunities. Financial advisors develop those insights by gathering and analyzing data on financial goals and investment potential.

Artificial intelligence (AI) also excels at decision-making by bringing speed and efficiency to the decision-making process, analyzing vast data sets at a rate well beyond human potential. It also improves accuracy and consistency by removing human biases, emotions, and fatigue from the decision-making process.

With that in mind, financial advisors may be wondering if they should be concerned about AI, especially with media reports predicting that AI could replace the equivalent of 300 million full-time jobs. Will financial advisors be among those whose skills become obsolete as AI becomes a fixture in the business world?

The answer to that question depends on how financial advisors engage with AI.

How does AI serve the investor?

The AI-driven investment tools that are starting to appear in the financial industry are not the first “automated advisors” to offer their services to investors. Robo-advisors — which were introduced as a way to provide investment insights to the masses — have been around for over a decade. However, those early examples of fintech failed to gain acceptance because they lacked intelligence, personalization, and context. Human advisors, at that point, could still outperform their computerized counterparts.

Today’s AI-driven tools don’t have the same weaknesses as the robo-advisors that preceded them. By granting AI-driven tools access to their personal financial data — something that over 200 million Americans have already done to gain access to other fintech services — investors can gain valuable personalized and contextualized financial insights from generative AI platforms.

With early robo-advisory service, those seeking advice were expected to bring a solid understanding of their personal finances to the process. They had to have already decided how much they could invest and what goals they were pursuing.

Once provided with data that depicts an investor’s financial history and current situation, today’s AI tools can guide investors toward healthy goals, educate them on the nuances of financial management, help them to develop a personalized investment approach, and passively track their progress over the years. In essence, AI adds personalization to fintech’s automation, representing a monumental leap in how that technology can assist in developing, implementing, and tracking financial strategies.

How does AI serve the advisor?

The best way for financial advisors to thrive in the age of AI may be for them to partner with AI to enhance their own capabilities. Rather than thinking of AI advisors as competition, they should be viewed as digital partners that can lend their skills to efforts that streamline and strengthen the advising process.

AI can make it easier for an advisor to manage client information, personalize interactions, process data, and track communications because it can provide dynamic forecasting and evaluate potential investment strategies quickly and efficiently. This potential can allow human advisors to provide greater value to their clients as well as make themselves available for a greater number of clients.

In the financial sector, as with other sectors where AI is making inroads, the ultimate questions may not be which one to choose — AI or humans — but rather how can the two work together to provide a more impactful experience for those seeking advice.

For more information, visit the WallyGPT website HERE.

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About Author

Saeid Hejazi is the Co-Founder of Wally, a personal finance app that helps people worldwide track and manage their finances. The app is free to download and use, and it connects with 15,000 banks from 70 countries and has been lauded for giving people insights into their finances in a straightforward way. Saeid graduated from Valley Forge Military Academy and went to study computer science at York University in Canada. After winning a national business plan competition in his senior year, he turned the idea into a startup called Nahel which eventually became the "Amazon of the Middle East" and was later acquired by Aramex in 2013.