HOW DOES AI FIT INTO FINANCIAL PLANNING? OUR TAKE ON ITS FUTURE
Let’s get real: Artificial intelligence (AI) is already embedded in our lives.
AI helps us organize our thoughts and write better, map our drives, vacuum our homes (thank you, Roomba), “talk” to doctors and schedule appointments.
It’s changing our world, financial planning included.
The real question is: Will AI replace financial advisors? Will it replace people?
I can’t imagine a world where that will happen. Why?
Financial planning doesn’t live in an either/or world. It’s an all-in process, part art and part science.
Despite advancements in AI technology, artificial intelligence lives in a black-and-white world of aggregating numbers and the like. AI simply can’t match the level of personal empathy and holistic expertise that human financial advisors offer.
That’s why at Alia, we’re using AI to enhance our existing financial advice capabilities in areas like:
predictive planning
budgeting and forecasting
performance insights and decision analyses
risk assessments and scenario planning
That’s the science behind what we do—using AI as another tool to drive efficiency and data-driven solutions.
But comprehensive financial planning is never totally going to be an input/output, automated process, simply because we humans are involved, and with that comes the emotions, backstories, mistakes and successes that people bring to the table.
How clients benefit from a real-person, real-time partnership with their financial advisors.
You’re on the winning side of our experience, knowledge and nuanced understanding of the business that AI just can’t provide.
You can ask us questions about complex financial matters, and we’ll go over it until you feel comfortable.
You can plan with expert guidance that’s tailored to your unique financial situation and life goals.
You can lean into our wealth-building strategies with confidence because they are developed with YOU in mind—customized to reflect your lifestyle, personal values, ethical considerations.
Trust, too, is essential. I have a fiduciary responsibility to manage your assets with your best interests in mind.
But that doesn't mean we financial planners can't benefit from AI. In fact, financial planners would be remiss if we didn’t take advantage of its power, especially as finance software gets better and better at leveraging the technology.
What’s ahead?
Automating administrative activities, like meeting transcription and note-taking
AI can use speech recognition technology to generate accurate meeting records, enabling planners to focus solely on their clients’ needs.
Optimizing portfolios
AI algorithms can analyze large data sets in seconds to help identify trends in asset performance, interest rates and inflation; and balance assets and predict portfolio performance.
Strengthening regulatory compliance and reporting
AI can monitor transactions, automate reporting, notify planners of regulatory changes and automate identity verifications and background checks, among other important compliance and reporting procedures.
Now, about robo-advisors…
Robo-advisors are automated financial advisors that provide algorithm-driven wealth management services.
Most industry sources say robo-advisors grew out of 2008’s financial crisis, with Jon Stein’s Betterment leading the charge to provide people with a lower-cost-of-entry, self-directed investment option. (Other sources date it as 2006, when Mint launched its first semi-automated personal financial management.)
Who’s using them?
From its Affluent Millennial Investing Survey, Investopedia found that 20% of affluent millennials (ages 23-38) use robo-advisors, compared to 13% of Gen X respondents. Looking at a younger segment of the population, 31% of those age 18-22 use robo-advisors compared with only 9% of investors aged 47-54.
(Interestingly, 43% of the affluent millennials surveyed said they use a financial advisor. Those who consider themselves knowledgeable about investing are more than two times likelier to have a financial advisor than their less knowledgeable peers.)
But remember, bots, while they can certainly produce higher portfolio returns, are limited in their functionality.
As I see the role of robo-advisors:
Pros
Convenient to use; access 24/7
Lower cost, low starting capital
Investment experience not required
The ability to avoid human error and bias
No need to set up meetings or deal with scheduling
Cons
There’s no one to answer questions: Some robo-advisors only offer human support for tech- and account-related questions
Limited investment opportunities
Investor led: Investors define financial situation and investment goals
One-size-approach might not be right for all
At Alia, we take a long-term holistic approach, with a wider scope of services beyond only managing assets and investments, including retirement and tax planning, estate planning, trusts and setting up funds to care for loved ones.
Together, we’re charting your course, planning for your dream home, preparing for your long-awaited retirement, getting the kids through college. Kids Pixar movies aside, AI and bots simply can’t generate the long-term, trusted relationships we pride ourselves in having with our clients.
Contact Lindsey and her team today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
