AI's Impact On The Financial Advisory Industry

The AI revolution seems to be in full swing these days. Technology companies are going all in on producing the next hop forward in AI tools and interactive systems, and the systems themselves are putting out something verging on the miraculous at times. From video products to analysis reports, AI is staking its claim as a tool that can truly improve the human condition. Concerns over a mass workforce replacement aside, there's plenty of things that humans are using AI to augment already, one of those realms covers the world of personal finance and investment advice.

We spoke with the author of "Financial Planning Made Personal" and founder of Mitlin Financial, CFP Lawrence Sprung, about the changes already occurring — as well as those on the horizon — in the personal finance industry. Specifically, we wanted to know about how personal finance experts view AI today, and what the future might hold for members of this professional community as they continue to progress in sophistication and capability. Sprung said, "AI has only scratched the surface in our profession," but he wasn't overly pessimistic about a potential diminishing of his own role in the personal finance space. Indeed, Sprung noted a few key ways in which it's already helping him and his team to provide a better service to their clients.

At its core, the job of a financial adviser is to read the tea leaves and analyze the market for others. Financial planners will be constantly seeking to understand how events can shape markets. From the effect of wars on the stock market to the introduction of new tech, there is a never-ending stream of new details to take into account. That said, maybe the most definitive change AI will bring into the fold is the sheer volume of actual analysis a financial adviser might need to perform.

These processes are far from a sure thing, and human error and biases can muddle a process to an even greater extent. On that score, Lawrence Sprung notes the value AI systems are already bringing to financial advisers in this realm, telling us, "AI has begun to streamline processes that used to be time-consuming to minutes. This allows my team to spend more time with the families we serve, which is where we should be."

Sprung admits, "I do believe AI will replace some roles within the financial profession and will consolidate the number of people a team may need to serve the families that they do," but suggests financial advisers themselves won't be going anywhere.

While artificial intelligence tools are a perfect fit for some areas of workplace workflow, they aren't catchall solutions that can completely replace the human experience. There is plenty of research on how to make improvements in this field, but considerations over the means of validating human-ness rather than artificial intelligence remains a major priority for direct users and those adjacent to these tools.

In his experience with AI technologies, Lawrence Sprung has seen both the value of AI's analytical power, as well as its shortcomings in working directly with clients. "People need connection and the relationships we build with those we serve cannot be replaced by AI," he said. "In addition, although AI may be able to help shorten the process of reviewing data or helping to identify opportunities, I do not believe it will replace the human intelligence needed to review choices with a family in order to help them make the best decision for them."

The reality of AI investing tools is a cold, calculating experience. These systems are immensely valuable in evaluating trends and exploring large data sets in an effort to find potentially lucrative investment opportunities. However, they can't replicate the calming presence of a financial adviser. Some savers who have plenty of experience in building their own investment portfolio may find the raw analysis to be more useful than if it were delivered through the confidence-building filter of a human adviser; yet, all too many savers don't have this background and, therefore, need financial planners in their lives.

Not only is AI an advanced tool that appears poised to increasingly assist financial planners in the time-consuming analyses associated with their profession, but AI may be a great sector to invest in directly. Investing in companies that are focused on research in the field can provide a way to get in on the financial upside of these technological breakthroughs. Brands like Microsoft (a company that has invested $13 billion into OpenAI) or Google (the search engine monolith that has played around with its own AI integrations) can be solid options for investors to consider. IBM, Intel, and Nvidia (which split its stock 10-for-1 in June 2024 after reaching a $1,208.88 share price) are also major players in the computing space that collides with technology's AI subregion.

Moving in a different direction, however, AI tools can also provide a decent jumping off point in your research on new investment options. Rather than investing in the sector directly (perhaps if you don't find the financials to be all that promising or are simply bearish on the concept altogether), a robo-adviser powered by AI might be an avenue worth pursuing. Robo-advisers might not totally fit your needs, and can't be tailored to your exact specifications in the way human interaction can, but the analytical products can represent a high quality and provide you with a good base to launch from. Just remember you may ultimately decide to enlist human help in the end for that unique personal touch and reassuring comfort that AI just can't match.