Industry experts at the Future Proof festival said AI is integral to growing advisor teams and client based.
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It requires little imagination to picture artificial intelligence as a potential career-killer. The reality, however, may be quite different for financial advisors.
Advisor headcount is actually expected to grow as AI expands productivity and work capacity, according to Cerulli research conducted from May to July at firms holding a combined $1.2 trillion in assets. Over the next two years, RIAs said they plan to do a lot of hiring, with 73% making junior advisors a top priority, 67% bringing on more service associates and more than half of firms focusing on senior advisors. All of that expansion is partially a result of AI reducing manual and administrative work while improving the quality of client communications.
“It is not lost upon the financial industry that this is a huge deal,” tech-stock bull Dan Ives said during a panel at the Future Proof Festival this week. He said the AI revolution will be a net positive across all industries. “More jobs will be created than taken away when it’s all said and done.”
Harnessing AI effectively is also essential to attracting more clients, especially at the high-net-worth end of the market amid the great wealth transfer, said David Barnard, founder of estate planning fintech firm Luminary. “The firms that get this right are not just going to win the great wealth transfer, they’re going to grow their businesses faster today,” he told Advisor Upside.
But while it often feels like AI is the only thing business executives are talking about, full adoption of the tech is actually quite shallow, with only 12% of firms qualifying as “leaders” in Cerulli’s framework:
Most firms are using AI in some capacity, but they’re still very much in the piloting phases, with models serving as notetakers and email drafters and handling CRM updates.
Meanwhile, less than a third of RIAs have fully adopted an AI game plan, with the tech integrated across workflows and governed by a documented strategy.
For the many firms still in early stages of their AI journeys, compliance, regulatory and data privacy concerns remain top barriers, followed by a lack of internal knowledge about how to use the tech.
“We expected the biggest firms or the biggest technology spenders to be furthest ahead, but the real differentiator was operational discipline,” Asher Cheses, senior director of wealth management consulting at Cerulli, said in an email. He added that the advisors who learn how to effectively incorporate AI into their workflows will have a significant advantage, while those who fail to adapt risk falling behind.
It Can Happen to You. In the meantime, there are instances of AI already replacing advisors. Domain Money, the RIA founded by venture capitalist Adam Dell, recently laid off “about half” of its financial planning team, InvestmentNews reported. Dell told the outlet the layoffs were a result of “improved automation and efficiency” that let one Domain Money advisor serve up to 150 clients.
Maybe that techno nightmare is more than just a bad dream.
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