The financial advisory industry is in the process of significant demographic shifts. A younger generation of advisors who are more tech-forward, combined with clients who expect seamless digital platforms and AI integration, require independent advisors to adapt. These generational shifts, technological advancements, and the rising influence of AI will shape the next generation of advisor-client relationships, according to a new report.
In a survey of 500 independent RIAs with assets between $10 million and $250 million, Betterment Advisor Solutions' 2025 Advisor Survey found that, while RIAs are generally optimistic about the US economy, especially for those who have younger clients, concerns remain around enhanced client communication and the emergence of "ChatGPT financial advisors." Now that millennials make up a majority of clients (57%), and younger advisors (Gen Z and millennials) represent 70% of the surveyed group, these demographic groups will define the direction of the industry for the foreseeable future.
According to the report, 85% of advisors are somewhat to very positive about the current economic climate, but 90% have chosen to make changes to mitigate risk in investment strategies, particularly around the US tariff environment.
The report notes that RIAs of all generations face an AI paradox. While the number of RIAs using AI has increased 10% year over year, most are concerned about how clients use AI for financial advice. Even across generational divides, those surveyed agree that AI is useful in staying up to date with industry updates, surpassing social media. However, there is concern, as 65% of those surveyed admit that they are worried about clients using AI for financial advice. Those concerns include lack of regulation and oversight around AI tools that provide financial advice, which poses the risk of clients either misinterpreting advice or simply receiving inaccurate advice from the AI tools.
Gen X and boomers state that the top AI use case for advisors is that it enhances client communications, followed by portfolio management and risk assessment and fraud detection. Meanwhile, Gen Z and millennials ranked the automation of administrative tasks and processes as the top use case, followed by risk assessment and fraud detection, while enhanced communications fell to third place.
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