There's widespread recognition that advisors of all sizes need to begin adopting generative AI to keep growing, but how advisors apply AI tools is moving slowly and runs a gamut.
There are some advisors who are testing certain AI applications solely in back-office operations like automating meeting summaries, or managing client onboarding and portfolios. Others are using AI in more client-facing activities, like for marketing to prospects or existing
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A newly released 2024 Advisor Outlook Study by Schwab Advisor Services found that 62% of more than 1,000 independent investment advisors said they plan to use AI tools to automate routine tasks, next to 39% who said they'd use AI to enhance risk management and compliance efforts. The results contrast with another 21% who said they'd use AI to automate client services, like a chatbot, or for marketing (35%).
"The most easily adopted piece has been where advisors are finding something that's not directly in front of clients because some clients might feel a little nervous about some AI," said Jordan Hutchison, vice president of technology and operations at RFG Advisory.
Hutchison said the AI notetakers, like Jump and Zocks, which are built for the advisor space, have grown in rapid popularity with advisors as well as the number of tech developers providing such services.
"It has been like wildfire," said Hutchison, whose firm is also testing AI notetaker apps. "It went from like one [provider] to now literally, every company's got one."
Hutchison will be speaking on AI use cases in financial planning during Financial Planning's first conference dedicated to AI,
However, there's still greater hesitancy with advisors using AI tools for marketing or client-facing engagement. Part of the caution is regulatory. Officials at FINRA and the U.S. Securities and Exchange Commission have been increasingly vocal warning the industry about how AI is being marketed to investors
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There's also a hard-pressed desire by both advisors and clients to keep the human touch in the relationship, which is another reason why advisors tend to apply more back-office AI tools.
"We view AI at Orion as assistive technology," said Adam Palmer, vice president of strategic product development at Orion Advisor Solutions, a leading wealthtech platform and AI developer for advisors. "We do not take the stance or view of AI as a replacement to the advisor-client relationship because you still need that human connection about something so vulnerable, being their finances. . . .The last thing you want is to be left without that human connection around that very vulnerable topic."
Still, there's strong industry hype about how AI can be used to attract clients.
A new survey conducted by Financial Planning of 270 professionals in wealth management found that 43% said generative AI tools will play a "very important" or "extremely important" role in their firm's efforts to capture new clients and/or retain children inheriting wealth from existing clients.
Yet, when asked how effective their firm has been in leveraging any technology the past few years to market to new clients, only 21% said it was "very effective" to "extremely effective." Another 46% said it was only "somewhat effective."
Part of this lackluster result might be due to slower adoption rates of AI. Most studies of advisors in recent months show about 30% to 40% of respondents have plans to adopt AI tech. Financial Planning's survey found 33% feel their firms currently view gen AI and its potential contribution as a high priority.
"The 33% figure reflects early movers who are already exploring how AI can optimize back-office functions, enhance compliance and improve client service," said Ritik Malhotra, founder and CEO at
Likewise, the Schwab survey found that just 23% of RIAs have begun implementing AI tools in some way at their firm, and 30% said they don't know their firm's plans for AI implementation. However, 54% of RIAs said they expect AI implementation to have the greatest impact on industry growth over the next three years.
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"Generative AI is still at such an early stage, and RIAs are in test-and-learn mode. Some early use cases suggest that as this technology matures, it has the potential to drive meaningful impact and improvements for RIAs of all sizes," Tom Bradley, chief client officer at Schwab Advisor Services, said in the report.
READ MORE: RIAs need to be using AI tools 'yesterday,' tech leaders say
Schwab conducted the survey through June 28. The 1,088 respondents were independent investment advisors who custody assets with Schwab Advisor Services, representing a total of $451 billion in assets under management.
Despite a firmwide push to adopt AI, more than 80% of advisors agreed that more work needs to be done before AI's full benefits can be realized, according to the Schwab survey.
"Once the primary fintech providers integrate generative AI into their platforms, mass adoption will follow," said Nyle Bayer, chief marketing officer at Future Proof. "Right now, the technology is still new, and adoption in finance is historically slow. We need larger fintechs to lead the way and set the standard for the rest of the industry."
