How advisors are increasing efficiency and impact with AI

• Generative AI represents a breakthrough technology that is primed to impact virtually all industries.
• Specific to advisors, near-term applications for AI include using it as a critical tool to boost day-to-day efficiency, enhance client communications, and foster new business growth.
• These use-cases will help advisors spend more time with clients, less time on repetitive tasks, and ultimately, serve as a powerful growth driver across the financial services industry.
• Whether you adopt today or tomorrow, we believe that all advisors should understand AI’s impact on the financial services landscape.

Artificial intelligence (AI) has made significant advancements this year and the world is taking notice. ChatGPT, a Generative AI bot, achieved a remarkable milestone by attracting 100 million monthly active users within just two months of its November 2022 launch. This unparalleled adoption established it as one of the fastest-growing consumer applications in history¹, unlocking a world of possibilities for millions of users across many industries, including financial advisory.

AI is here to help advisors. Especially given that demand for advisors’ services is being propelled by significant demographic shifts, including aging populations and longer lifespans. These shifts have given rise to a heightened need for all-encompassing financial planning services.² Employment levels for financial advisors are projected to grow by an impressive 15% from 2021 to 2031, nearly tripling the expected average U.S. occupation's growth rate during the same period.³

AI is already transforming how asset managers and advisors make investment decisions on behalf of their clients. In this article, we will focus on how advisors the power of AI to enhance efficiency, improve client communication, and drive business growth – as well as hypothesize future use cases of AI in this domain.

Condor Capital Wealth Management, an RIA in Martinsville, New Jersey, sat down as a team in early 2023 to talk about how their team would approach AI.

Their team utilized ChatGPT to develop custom Excel macros for extracting data from various in-house reporting tools – ensuring that client data is protected via internal-use only rather than input into a 3^rd party tool like ChatGPT itself. These macros were used to configure new client dashboards, helping supercharge pre-meeting prep and meetings themselves with client account data always at the ready.

The average advisor spends approximately 11 hours per week on administrative duties - about 20% of a typical 53-hour workweek.⁴ The good news? AI offers solutions. In the sections that follow, we will take a closer look at how advisors are harnessing the power of AI to enhance their operational efficiency. Additionally, we will explore some compelling examples of potential future applications that are worth looking forward to. It is important to keep in mind that while certain factors, such as regulatory changes, might come into play, the landscape of possibilities remains rich, offering plenty of reasons for optimism.

Millennials and Gen Z are digital natives who have grown up expecting tailored content and recommendations. They have been exposed to algorithms, such as social media feeds, search results, and product recommendations, that cater to their individual preferences. This has set the bar high to provide content and communications that align with their interests and needs. With Millennials set to inherit $66 trillion by 2030 (greater than the sum of the world’s top three GDPs combined), this is not a trend to discount.^8,9

Expanding the advisory business with AI does require careful consideration of issues, including data privacy, ethical concerns, and regulatory compliance. While AI can bring many benefits, it is important to strike a balance between automation and the human touch that clients will always need from their financial advisors.

Even as AI proliferates, understanding the personal circumstances and aspirations of clients will always demand a human touch that machines cannot replicate. While AI can assist, the blend of expertise and emotional intelligence makes advisors indispensable partners in navigating the complexities of clients’ financial journeys.

And while generative AI can significantly enhance the capabilities of advisors, it is essential to prioritize safe usage. Protecting clients' personal information is paramount, and advisors must exercise caution and follow firm-level protocols.

All advisors need to make their own decisions as to if, when and how they will deploy AI in their practices. However, at a minimum, we believe that all advisors should:

1. Have a plan: Prioritize understanding AI as a fundamental step. Task a team member with exploring its capabilities thoroughly. Delve into its functionalities and become well-versed in its nuances through hands-on experience.
2. Understand limits and consequences: AI can fool us into thinking they understand more than they do, and that can cause problems. ChatGPT gives confident answers, but it does not think. And if it takes as gospel, for example a Wikipedia page, it may make claims that are debatable or outright wrong.
3. Know what you’re giving up: Understand the exchange involved in utilizing AI tools like ChatGPT. Each interaction is logged, retained, and occasionally analyzed by humans for optimization. Refrain from sharing sensitive or private information to ensure personal or confidential details are safeguarded.

This theme is in early stages and primed to impact a range of industries; financial services is no exception (read more about potential investment opportunities in AI here). By embracing the power of generative AI, advisors may unlock new horizons by enhancing operational efficiency, improving client communication, and growing their businesses to unprecedented heights.