AI is a tool to elevate and redefine job duties. Here are strategies for how AI can augment the work of fiduciary advisors while helping them stay relevant and competitive.

In our rapidly evolving technological landscape, artificial intelligence has made inroads into our daily workflows, performing tasks such as answering client emails, creating content and facilitating internal communication. Even Google’s auto-complete function in Gmail is a significant time saver. AI provides a sturdy foundation. Because of this, large firms like Intuit have developed AI financial assistants.

Despite the vast utility, the advent of AI is not without its hitches. The technology requires human intervention for research, fact-checking and voice modulation. Take, for instance, the SECURE 2.0 Act. Our firm and others have been interpreting and publishing content on this new law for months, but AI tools are somewhat behind in this aspect due to their lack of timely updates.

But what does AI in the financial advice sector truly entail, and what are the misconceptions surrounding its role?

The role of AI in finance

The introduction of any new technology inevitably fuels apprehension about job security, and AI is no exception. Most recently, Hollywood writers and actors announced a strike against studios, with AI being a major point of contention. Technological advancements, including asset-aggregation systems and customer-relationship management tools like Salesforce and Redtail, have all led to significant time savings and efficiency boosts. But those gains sometimes came at the cost of certain administrative roles.

With a mindset change, AI can be seen not as a job-eliminating villain but as a tool to elevate and redefine job duties for financial analysts working on estate planning and more. If AI can automate account applications, it will empower the personnel who previously handled that task to undertake new responsibilities within the firm, such as increased client interaction.

But how can AI augment the work of fiduciary advisors while helping them stay relevant and competitive?

Enhancing RIA work through AI

1. Client onboarding and profiling. AI can streamline the client-onboarding process by automating data collection and verification. It can also help create detailed client profiles using data analytics, enabling advisors to understand their clients’ financial behavior, risk tolerance and investment preferences.

2. Portfolio management and risk assessment. AI can analyze vast amounts of market data to provide insights into investment opportunities and risks. This can enhance portfolio management strategies and help advisors make informed decisions quickly, which is crucial in a field where timing is everything.

3. Regulatory compliance. With its ability to track and analyze large volumes of data, AI can help RIAs stay compliant with ever-changing financial regulations. Automated systems can identify potential compliance issues and provide real-time alerts, reducing the risk of costly errors or oversights.

4. Client communication and engagement. AI-driven tools like chatbots can handle routine client queries, freeing up time for advisors to focus on more complex issues. Also, AI can help maintain consistent client communication, providing updates and reminders based on clients’ preferences and behaviors.

5. Scaling small-client solutions. Many RIAs struggle to service smaller clients profitably. AI can help by automating routine tasks and enabling advisors to provide cost-effective, scalable solutions to this segment. This will not only expand the client base but also build loyalty and trust among a broader range of clients.

By integrating these AI capabilities, RIAs can significantly enhance their services, increase their efficiency and maintain a competitive edge in the evolving financial landscape. But while AI can perform many tasks, it can’t replace the human touch and expert judgment that RIAs bring to their work.

The human element in financial advising

The biggest question people have when learning an emerging technology is: Will AI replace finance jobs?

Yes, but it won’t replace financial advisors.

Despite the rise of AI in finance, there is an irreplaceable human element that AI is unlikely to emulate. This is anchored in relationships and trust – deeply personal and individualistic elements.

A human financial advisor has the unique advantage of not just filtering and interpreting data but applying it contextually to best serve the client. As advisors, we are more than financial consultants; we’re accountability partners who ensure financial tasks are complete and align with a broader strategy. We understand the broader strategy because we know and care about the person across the table. A human advisor can understand their clients’ financial goals and the value money holds in their lives.

Consider this: An AI might dissuade a client from an expensive vacation based on mathematical risk. In contrast, a human advisor, understanding the value their client places on experiences and memory creation, might explore alternate funding strategies to make that vacation possible without jeopardizing other financial goals. This is the unique strength of a financial advisor in a client relationship

While there’s fear that AI will replace finance jobs, remember the critical roles that human insight, empathy and understanding play in financial advising. It’s not just about the numbers but the people behind them.

The incorporation of AI in finance is not a threat but an opportunity. It’s a chance to offload routine tasks to machines and concentrate on what truly matters: cultivating relationships and providing personalized financial advice. These efficiencies might even allow advisors to provide themselves with better self-care. AI and human advisors are not competitors but partners in this intricate dance of financial advisement. AI provides the rhythm, but it’s the human advisors who lead the dance.

LeackStat 2023