Just a few decades ago, giving financial advice was largely a manual process – printing lengthy financial plans, processing physical checks, and managing paper files. Then, technology evolved, introducing tools like Excel, the internet, and sophisticated financial planning and CRM software that transformed how advisors deliver financial advice. Today, AI is poised to drive another transformation in financial planning – but where will AI create the most change, and where is the human advisor still indispensable?
In the 154th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the opportunities and limitations of AI in financial advice, exploring how technology can enhance advisors’ work and where its boundaries lie.
AI offers exciting possibilities as a brainstorming partner, editor, and copywriter. Advisors may find it particularly useful for drafting meeting notes, creating summary emails, generating marketing ideas, and analyzing client data for actionable insights. However, while AI programs excel at addressing technical tasks and making data-driven decisions, they often fall short in areas of ambiguity. Many client concerns are deeply personal, requiring empathy, trust, and a nuanced understanding of complex emotional and financial situations. Questions like “What’s the best way to divide my estate among grandchildren with different life circumstances?” don’t have clear, calculable answers. Instead, they demand thoughtful conversations rooted in the client’s values. These conversations are often emotional and vulnerable, requiring a sense of safety built on years of trust that technology simply can’t replicate.
Despite the significant efficiencies technology has introduced, the time saved by advisors has often been reinvested into enhancing plans and services, raising the bar for client expectations while leaving advisory firm margins relatively unchanged. While the advisor’s role has remained remarkably consistent, even as support tasks have been streamlined through automation, there is still a real opportunity for advisors to use technology to focus on relationship-building and delivering unique personal value. Delegating and automating routine tasks allows advisors to spend more time guiding clients through the emotional and complex challenges of financial planning – work that requires an intimate connection and a deep understanding of each client’s unique situation.
The key point is that AI and other technological tools can provide significant support, they ultimately cannot replace the empathy and personalized problem-solving skills that form the foundation of the client/advisor relationship. As technology continues to evolve, advisors can seek opportunities to delegate or automate tasks, freeing up more time to do what only they can do: applying their financial knowledge to provide personalized guidance, while navigating complex emotions and building lasting relationships!
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