Financial advisors trust with AI is limited

Advisors trusting AI is hit or miss, Financial Planning survey shows

Man and AI robot waiting for a job interview

One of the biggest holdups for advisors in fully embracing AI tools is trust.

The learning technology is widely known to hallucinate when it's used as a predictive tool or large language model. That's mainly because the responses are based on the data that humans input, so it won't always have a perfect output.

That's also why a quarter of advisors recently surveyed by Financial Planning said their company is doing nothing specific with AI. Another 28% said they were "exploring" AI technology providers for their company. Most of the explorations have been to use AI tools for internal workflow functions such as dictating meetings and writing summaries for clients, rather than making financial predictions.

"AI can compress timeframes associated with market & company research, streamline models and suitability for clients, and generally cut down on times involved with running the business," wrote one respondent. "It will not be able to replace the human side of our business."

Financial Planning surveyed financial advisors at wirehouses, banks, broker-dealers and as RIAs in January 2024. The following results are based on feedback from those respondents.

Few advisors trust AI to make financial choices

One of the biggest trust issues advisors have with AI is using it to make personal financial decisions. Half of respondents said they'd trust AI to be responsible for making predictions on their car or house maintenance needs, but only 15% said they'd trust it to make financial recommendations.

Which of these activities would you trust AI to be mostly or wholly responsible for in your personal life?

Advisors fear AI could create distance from customers

The biggest fear advisors have in terms of how AI could hurt their business in its current interactions were with customers. More than 60% were worried they'd lose personal touch with clients versus only 31% who were concerned that AI could expose personal or proprietary data outside their firm.

How do you expect AI, in its current iterations, might hurt your business?

Advisors more likely to use AI for fact checking

If concerns about regulation were removed from the equation, advisors would be more comfortable having AI be responsible for areas like research and fact checking (57%) and helping employees with routine inquiries (54%). However, using AI in bigger risk areas like mitigating fraud was lower on their trust list.

Would you trust AI to be mostly to wholly responsible for any of the following for your business?

Advisors in the early stages of adopting AI tools

When it comes to how many advisor firms are actively looking at being AI ready, about 28% of respondents said they were exploring AI-tech vendors compared to nearly the same percentage (24%) who said their firm was not looking into anything specific with AI.

What, if anything, is your organization doing to be more AI ready?

Advisors trusting AI is hit or miss, Financial Planning survey shows

Few advisors trust AI to make financial choices

Advisors fear AI could create distance from customers

Advisors more likely to use AI for fact checking

AI more useful for automating workflows

Advisors in the early stages of adopting AI tools