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Next-Gen Advisors Upbeat on AI: Survey

By Michael S. Fischer

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Younger financial advisors are generally optimistic about the emergence of artificial intelligence in wealth management, according to a survey released Wednesday by Advisor360°, a provider of integrated technology for enterprise wealth management firms.

Sixty-four percent of younger survey participants, whose average age was 36.5, called generative AI a help to their practice, and 57% said it would benefit the industry. In contrast, 21% saw generative AI as a threat to their personal livelihood, and 31% said it is a threat to the industry. 

Next-gen advisors’ optimism toward AI suggests that it has a prominent role to play in wealth management, with 34% expecting the back office to benefit and 25% the front office. Just 16% of respondents said neither will benefit. 

Survey participants indicated that the biggest challenges they face in their existing tech setups are bad data and insufficient AI-enabled capabilities and end client capabilities.

“The up-and-coming generation of financial advisors sees generative AI tools as potentially effective for growing and managing their businesses,” Darren Tedesco, president of Advisor360°, said in a statement. “Advisors are looking to AI to take on administrative and operational tasks so they can focus on higher value activities, like meeting with current and prospective clients.” 

How do clients view AI-generated advice? A majority of participants in a recent survey said they distrust it. At the same time, a similar majority said they would be more confident about acting on advice from generative AI after they had vetted that advice with a financial planner.

Coleman Parkes Research fielded the survey in September and October among 300 financial advisors and executives at large broker-dealers, RIAs and bank trust companies across the United States. Participants were employed by enterprise wealth management firms with an average of $9 billion in assets under management and more than 1,000 employees.

Guidance Needed

The survey findings indicate that the adoption of generative AI tools has been fast and far-reaching, creating a new reality around the way that advisors work with their clients. Eighty-three percent of respondents said they already have access to tools with natural language generation technology, such as ChatGPT, but only 44% said they currently use them for client communications. 

Advisor360° noted that having access to NLG tools and using them are two different things. Many advisors said they are hamstrung by their firms’ policies on the technologies they can use. Nearly all respondents said their firms have AI strategies, but 43% said advisors should be more involved in shaping them. 

Fifty-three percent of surveyed advisors said their firms do not have established policies on how to use generative AI, although firms seem to be working to address this. Twenty-seven percent of advisors said generative AI policies are already in development at their firms. 

Wealth management firms may be slow to develop policies in the absence of clear guidance from regulators, according to the survey. Sixty-eight percent of advisors said more regulatory guidance around AI is needed. Only 32% of respondents said existing rules will suffice in the future. 

Lori Beer, JPMorgan Chase’s global chief information officer, recently told ThinkAdvisor that JPMorgan is working with U.S. regulators and walking them through its first set of generative AI pilot projects to ensure that all controls are in place.

“The wealth management industry has only started to scratch the surface on what generative AI can do,” Tedesco said. “Firms with the right systems in place joined with comprehensive and clean data can expect to realize mammoth gains in efficiency, as generative AI is able to tackle more streamlined processes and automated tasks faster and with fewer errors.” 

Michael S. Fischer

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