Registered investment advisors (RIAs) are progressing in their views on artificial intelligence (AI). Following an initial bout of “robots are coming” fear, advisors now view as AI as potentially accretive to their practices and a must-have technology.
Those positive views are important because technology, particularly as it pertains to the wealth management industry, is very much a lead, follow or get out of the way proposition. Advisors’ AI progress is vital for another reason: younger prospects prioritize technology in the advisor selection process, confirming that upping a practice’s AI capabilities is a credible, important long-term investment.
Fortunately for advisors, for as much as technology advances, clients still want the human touch, indicating they like technology but they’re only willing to go so far in terms of trusting it to manage their money. That’s good news, but there’s no getting around the intersection of humanity and technology and it’s palpable in the financial advisory space.
According to new survey data from Interactive Brokers, advisors are hip to those facts and view AI as important and additive to their business.
Advisors Believe AI Can Generate New Business
It differs from practice to practice, but winning new business is essential to a wealth management firm’s long-term health. AI can be a big assist on that front.
“62% of financial advisors surveyed say generative AI can help them be more efficient,” according to Interactive Brokers. “48% agree that generative AI will transform the role of the financial advisor within five years. ”
In other words, AI shares something in common with the other tech advisors have readily adopted: it adds efficiencies while freeing advisors up to meet with prospects and improve connections with existing clients. Those are compelling factors and reasons why many advisors are rapidly embracing AI.
“Advisors expect AI will be a tremendous ally in winning new business and engaging with clients, not a threat,” said Steve Sanders, Executive Vice President of Marketing and Product Development at Interactive Brokers. “The rush to AI adoption across the industry is setting the stage for a major evolution in advisor-client relationships in the near future. ”
AI for the Clients’ Sake
As noted above, garnering new business is a big deal, but the same is true of advisors’ client retention efforts. Existing clients have choices, meaning they can uproot whenever they want. On a related note, a slew of studies and surveys confirm that clients prioritize communication and trust more than investment returns when deciding to stick with an advisor or move to another firm.
AI isn’t a cure-all for those issues, but it certainly can free up advisors to enhance direct communication with clients. Looked at another way, a non-human technology can help advisors improve human connection and potentially cut down on client attrition.
“Advisors want technology that can solve day-to-day issues, like streamlining back-office operations, so they have more time for clients,” adds Interactive Brokers. “Advisors’ challenges with technology are not limited to time management. Their biggest concerns are over data privacy and the lack of AI and automation in their workflows. ”