Getting Smart About Artificial Intelligence: AI & the RIA
Star Trek fans of The Next Generation and later iterations of the popular sci-fi series are familiar with the motto of the Borg, the humanoid-cyborg race bent on galactic dominance: “Resistance is futile.”
In some ways, the Borg have provided us with an accurate analogy for how the evolving financial advising marketplace resembles a riptide of technological innovation, driven by artificial intelligence (AI) technology, sweeping up RIAs, clients, prospects, and most other aspects of the industry in its path.
Wishing for things to stay as they are or to revert to some “good old days” notion of the industry is probably futile, as the Borg would say. Instead, RIAs who intend to survive and thrive in the Age of AI will need to adapt to the reality that more and more people — and not just tech-savvy millennials and Gen Zers — are turning to tools like ChatGPT or the AI tools in their web browsers to answer basic financial planning questions like, “Should I convert my IRA to a Roth account?” “How do I go about selling my business?” or even “How can I save more for retirement?”
Many take it as a given that the younger the user, the more they rely on AI, and that’s not wrong. According to recent research:
- Seventy percent of Gen Z is currently using generative AI to create content and perform other tasks for both education and commerce (Salesforce)
- Fifty-eight percent of millennials say that AI will change their everyday routine (Barna Group)
- Fifty-five percent of Gen Xers believe that AI will improve their lives (PCMag)
- Twenty percent of baby boomers use AI tools at least once per week (Barna Group)
Don’t miss the significance of those last two bullet points. Noteworthy numbers of the boomers and Gen Xers who own the bulk of the assets managed by many RIAs are confident enough with AI technology to incorporate it into their daily work and research. And of course, a larger percentage of the millennials and Gen Zers who are growing — or inheriting — the wealth that RIAs will manage in the near future are even farther along the AI utilization curve.
When Clients Come Armed with AI-Generated Answers
How should RIAs prepare themselves to react and benefit? The first step is probably obvious, but still worth stating: Assume that your clients and prospects are coming to you with “AI-shaped” questions and assumptions. It’s also vital to keep in mind that some of the “information” they’ve obtained may be of dubious accuracy.
According to a recent study by the British Broadcasting Corporation, generative AI tools (which create content in response to prompts or queries from users) returned inaccurate or misleading data in more than half the cases, including factual errors and altered or nonexistent sources. As a trusted financial advisor with access to verifiable research from authoritative sources, you are in a position to help them sift through the torrent of available data in order to retain the wheat and release the chaff.
How Financial Advisors Can Leverage AI Effectively
On the flip side, advisors can leverage AI to perform many tasks more efficiently and quickly. Generative AI can be used to create marketing collateral, refine social media and other online outreach, perform data analysis and portfolio optimization, generate models, carry out certain research tasks, and even handle basic client service functions like appointment scheduling or taking meeting notes and noting action items. The key here is that RIAs must retain “human” oversight of these functions, in addition to staying on top of the compliance implications.
And speaking of the human touch, wise advisors will keep at the forefront of their strategy their skills as financial “coaches” and guides. After all, while an algorithm can perform computations and even generate probabilities more rapidly than any advisor could hope to, it can’t provide reassurance during rocky markets, incorporate core values or life goals into an overall financial strategy, talk a founder and her heirs through a sensitive estate planning process, or provide accountability while helping a client stay “on plan” instead of becoming reactive.
John Naisbitt’s 1982 classic Megatrends identified the emergence of “high tech” as a dominant factor in society, but he cautioned that “high tech” would need to be balanced by “high touch” — the human element that machine learning cannot supply. RIAs who are able to leverage AI in the areas mentioned above will benefit by being able to allocate more of their time to the “high touch” that forms the core of the fiduciary relationship.
By preparing for the ways that AI is shaping the expectations of clients and prospects and by leveraging its capability for scaling their practices, RIAs can position themselves so that resistance isn’t necessary, and “assimilation” actually leads to greater success for themselves and their clients.
5 Key Principles for Thriving in the AI Era
The way people discover, evaluate, and consume financial advice is undergoing a major shift.
What principles should you keep in mind?
- AI as the First Touchpoint: Just as Google reshaped how people research investments, AI chat tools are becoming the first stop for financial questions. This changes how and when prospects arrive at a professional’s door.
- Shifting Client Expectations: Clients may come into meetings more “informed” (or misinformed) because they’ve already queried AI. Advisors need to be prepared for more complex, AI-influenced conversations. Have your sources ready!
- Opportunities for Advisors: Rather than replacing human guidance, AI could free advisors from routine Q&A, allowing them to focus on deeper planning, emotional coaching, and personalized strategy.
Trust and the Human Element: Financial decisions aren’t just math — they involve behavior, emotions, and life goals. The human advisor’s role as a trusted coach and accountability partner becomes even more valuable in an AI-driven world. - Industry Implications: Firms may need to adapt their digital presence, marketing, and service models to meet clients who are now bringing “AI-shaped” questions and expectations into the advisory relationship.
AI won’t replace financial advisors, but it will redefine how clients approach them. The advisors who thrive will be those who embrace this shift, using AI as a complement to human expertise and leveraging it to elevate — not diminish — the value of personal advice.