AI tools for financial advisors: friend or foe?
If you’ve seen headlines like, “Can AI replace your financial advisor?” in the Wall Street Journal, don’t fear the clickbait. The data tells us a different story.
In 2024, Betterment Advisor Solutions wanted to explore trends we saw emerging in the financial advisory space from the next generation of RIAs. We surveyed 500 financial advisors, of which 72% were Millennials (Download the survey). What we learned about AI is that the only fear advisors should have is not adopting the technology soon enough.
Let’s take a look at the data on how RIAs are using AI, the benefits of AI, plus a few tips on how to implement AI wisely at your firm.
The data: AI can empower (not replace) financial advisors
Our survey found that four out of five advisors use AI in some capacity in day-to-day tasks, and among those who don’t, 64% intend to. This means that over 90% of RIAs may be leveraging AI in some form in the near future for tasks, like crafting client communications, automating operations, or even managing portfolios.
“It is encouraging to see how many advisors are adopting AI and not running from the opportunities and efficiencies it can offer to their firms.”
—John Mileham
CTO of Betterment
It’s clear that AI is not just a trend. It’s a technology that’s becoming critical for modern advisors to grow and compete.
The benefits: AI tools for financial advisors create efficiencies
We surveyed advisors currently utilizing AI at their firms, and the results show that the most frequently cited benefit of AI is assistance with client service tasks, chosen by 56% of respondents.
According to our survey, here are the top benefits of using AI tools for financial advisors:
- Assisting with client service tasks (56%)
- Creating personalized client communications (53%)
- Assisting with marketing efforts (52%)
- Assisting with operational tasks (51%)
- Note-taking / meeting recaps (21%)
Additionally, a few trends stood out based on the firm size and the age of an advisor:
- Among advisors managing a larger client base ($150M to $250M), 68% reported utilizing AI for operational tasks.
- The top use cases for AI also differ by generation, with Gen X and Boomer advisors more likely to leverage tools like ChatGPT for crafting personalized client communications.
Tips for getting the most out of AI at your RIA
If you're about to implement AI for the first time or are expanding your use of AI, keep these tips in mind to help guide your technology implementations.
- Find the right AI solutions: Rather than simply asking ChatGPT questions, shop around for specific tools that meet your business needs. There are specific AI platforms that can address business use cases for your firm. For example, you could implement an AI tool specific to investment management or for personalizing automated client communications. Approach AI like any other technology investment with a methodical review to ensure it fits your needs.
- Invest in AI training: Regardless of the type of technology, staff training is a must. With AI, provide ongoing training to staff, focusing on how to leverage AI for efficiency but also responsible use of the technology to protect client and business data.
- Keep your clients in mind: AI can drive efficiency across your business, but be sure to evaluate how it is changing your client experience. For example, AI may empower you to send personalized emails at scale, but be sure to review the emails for accuracy, tone, and other details. Automating tasks is a time-saver, but maintaining a high-quality client experience is just as important.
Want to learn more about tech trends for RIAs?
Check out the 2024 Betterment Advisor Solutions Survey. We dive deep into custodial platforms, technology challenges, and more.
