Are AI agents the next big wealth management disruptor? What financial advisors should know

Are AI agents the advance in generative artificial intelligence that financial advisors have been fearing? 

The received wisdom around wealthtech AI applications has been that rather than steal jobs away from advisors, they will free them up to deliver what machines can't: the human touch. And in the near term, as generative AI applications continue to battle hallucinations and work toward accuracy, clients are likely to keep turning to trusted human advisors when faced with financial and life crises and milestones. 

But a paradigm shift for advisors, fueled by numerous new technologies including blockchain, digital twins, spatial computing and quantum computing — and of course gen AI and large language models — is on the horizon over the next decade. And supercharging this shift will be AI agents.

READ MORE: How large language model 'superbots' are transforming wealth management

AI agents are not AI assistants

AI assistants provide real-time guidance to support a user's decision-making process, thereby enhancing efficiency. 

Serving a somewhat passive role, an AI assistant doesn't assume control, make decisions or take action. Useful for accomplishing complex tasks and for finding info in large datasets, AI assistants are particularly well suited for business applications that need support but not action.

Enter AI agents, which can mimic human gestures and voice and can reason and act with human-like intelligence. AI agents have the ability to understand context and make decisions, conduct sentiment analysis and determine a best course of action.  

An AI agent is autonomous, possessing the ability to take action (within certain guidelines) to reimagine and optimize workflows. The autonomy of AI agents allows them to, among other things, initiate tasks; make independent decisions, which can be validated by another authority; interact based on deep, contextual understanding; and adapt with a self-enhancing learning capability. 

AI agents can, therefore, change the way financial advisors and their clients interact. 

By drastically streamlining processes and providing humanlike give-and-take with clients, AI agents allow the advisor, who is the final authority (after compliance processing), to review recommendations and ideas and ultimately spend their time and energy connecting with clients and guiding them toward achieving their financial goals over the long term. 

READ MORE: From writing assistance to presentation builders: Top AI tools picked by wealth leaders

'App-less' AI agents

Yet an even more significant AI evolution for the industry is still to come in the form of "app-less" AI agents. 

Currently, wealth management firms have multiple apps performing a variety of different functions, such as financial planning, risk assessment and client profiling. 

In the app-less AI agent scenario, you may have one agent responsible for all these activities with access to all the requisite data. Gone will be the multiple apps with multiple integrations.

Instead, the "app-less" enterprise will be made up of AI agents that are synchronized across an organization through an API, with the goal of delivering a frictionless, humanlike experience to clients — voice activated with the ability to respond to inquiries with no logging in and out of multiple applications. With their potential to scale processes while eliminating the use of disparate apps and/or systems firm-wide, app-less AI agents will drive a new digital experience for advisory firms by eliminating pieces of the tech stack such as client- and employee-facing apps for services across the enterprise, including client prospect marketing, customer service, banking, compliance and portfolio management.

READ MORE: What will it really take for wealth management to transform digitally?

This network of AI agents, which possess the ability to reason and act, and with the ability to mimic/reflect emotions, will help solidify relationships with clients by establishing that it is a trustworthy source of financial information and advice. 

AI agents can, therefore, take on some of the core activities of financial advisors, such as collecting data to complete a predefined workflow, eliciting information that supports advisors' ability to understand clients and formulate personalized solutions for them. 

Future AI agents also promise to enhance enterprise value by accessing previously untapped data sources within the firm and creating new efficiency by significantly reducing or eliminating apps. This means that wealth management firms would be able to tap into their own proprietary data that is often buried in spreadsheets, notes and emails to improve the entire knowledge base, making it accessible and actionable to employees.

The evolving advisor

In my view, generative AI is not poised to replace advisors. But as consumers get more comfortable with AI in financial advice, firms must carefully evaluate their value proposition and operational requirements in order to deliver the deeply personalized experiences that are possible with AI agents. At the same time, the already evolving role of advisors will allow them to draw on AI agents in order to deliver guidance to clients in three key capacities.

Fiduciary advocate and authority. In the highly regulated field of wealth management, advisors must understand the business and be financial advocates for clients. AI agents can help automate the legal and ethical requirements to help serve this function, helping advisors to function as fiduciary advocates and authorities. 

Life and financial wellness coach. Clients want their financial advisors to understand their financial lives and create financial strategies in the context of their larger life milestones and temperaments. With administrative tasks shifted to AI agents, advisors will be able to devote additional time to clients and to create appropriately personalized solutions. 

Trusted friend. Clients want to be guided by their advisors, but they also want to be seen and understood. The perceived value of relationships with financial advisors is largely an emotional one, founded on currencies of compassion and empathy. 

AI agents don't yet possess these human traits to the same extent as actual human advisors, and whether they may in the future is an open question. What's certain is that wealth management firms will need to take new approaches to business models. Even if a firm is in early stages of considering or implementing gen AI, now is an excellent time to ready the organization for the moment when gen AI and AI agents become more accessible.