Caution remains the watchword when it comes to AI

Whether you love it or hate it, AI’s integration into financial services is not just reshaping how portfolios are managed and advice is given, it is fundamentally altering the relationship between advisors and clients.

Andrew Altfest, president and founder of FP Alpha and president of Altfest Personal Wealth Management, says the impact AI has on the industry right now is “tremendous.”

“First of all, the value proposition of an advisor is evolving and growing tremendously,” he says. “We're going from a world in which we were, years ago, just focused on the investments and the portfolio, to a world in which we, as advisors, can help can really throw ourselves into all the financial problems that exist in someone's life.”

Gabe Rissman, co-founder and president of YourStake, a suite of AI-driven personalization tools for financial advisors, highlights six tools that advisors are using when it comes to AI: predictive analysis, ChatGPT, recording tools, compliance, document extraction and analytics assistants.

Out of the six, he says advisors are most excited about anything that saves time and creates efficiencies.

“What you'll be seeing in the industry is kind of a consolidation of all the AI tools. I think that's what advisors want: a one-stop shop, to be able to take advantage of all these time efficiencies. I don't think there's one in particular that advisors are really jumping on, but they're jumping on the concept of efficiency and time savings, and there's a lot of different tools that can help with that.”

Despite the advantages that AI can bring to an advisors’ firm, Adam Holt, founder and CEO of Asset-Map, believes advisors are more curious and cautious at implementing anything AI-related. Rissman and Holt both say advisors are cautiously using AI, mainly for marketing and content creation that are also protected, and compliance controlled.

“I would say we've seen generally a buzz down on AI, but also more of a general awareness of this thing being a legit threat long term,” he says. “Nobody really understands how long it's going to take to really infiltrate into the financial services market, because there's so much regulation. But then it might be one of those things that works in the back office and doesn't really get into the forefront for some time.”

Holt added it’s also starting to cause confusion for advisors when it comes to implementing a business strategy. “Everybody's asking this question, from investors to clients to financial advisors, ‘What is your AI strategy?’ The problem is, the question is so broad, it's actually meaning different things.

“The question should be ‘How are you implementing AI today in your practice or in your toolset?’”

At Asset-Map, he highlighted the fintech company recently implemented an AI support bot, that is fully trained on their support articles. He said it has since saved them 65 percent of inbound calls. Holt is quick to point out in saying he doesn’t think that AI tools should replace the advisor, but rather used for more bubbling up opportunities “so that an advisor can finally be proactive as opposed to replacing the advisor role directly in the short term.”

Altfest agrees, as he believes, advisors need to continue to “lean human.”

“That's a huge differentiator from us, we don't want to just be providing the value of the the AI technology,” he added. “The technology is freeing us up to spend more time with our clients, understanding their needs, coaching them through things, and having more meaningful conversations … [but] we don't want to just rely on the AI technology that's giving us actionable advice.”