NextGen Wealth Advisors Are Chilled About AI

Tom Burroughes

29 June 2024

A study of 300 “next-generation” advisors in the US finds that they are not scared of artificial intelligence taking their jobs and think this tech will benefit their business.

The survey, from Advisor360°, a provider of integrated technology for enterprise wealth management firms, found that 64 per cent of younger advisors call generative AI “a help” for their practice, while 57 per cent believe it is a benefit to the industry.

The firm’s 2024 Connected Wealth Report: AI & the Next-Gen Advisor, looks at how the next generation of financial advisors perceives AI. The advisors in this survey were more or less 36.5 years old, had been in the business for 10 years at firms with $9 billion or more in assets under management, and each managed $40 million in client assets.

Controversy and interest in AI continues in the wealth management sector. The drama at OpenAI in recent days highlights how important AI now is. The explosion of interest around AI this year – as seen by the rise of the ChatGPT platform – has prompted some, such as entrepreneur Elon Musk, to caution about the dangers. On the flipside, Silicon Valley venture capitalist and technology thought leader Marc Andreessen has argued that AI is a major productivity tool and that pessimism and scary scenarios are unwarranted.

In other findings, the Advisor360° study showed that 21 per cent of advisors surveyed consider generative AI to be a threat to their personal livelihood and 31 per cent call it a threat to the industry.

“The up-and-coming generation of financial advisors sees generative AI tools as potentially effective for growing and managing their businesses,” Darren Tedesco, president, Advisor360°, said. “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.”

Some 83 per cent of respondents already have access to tools with natural language generation technology – such as ChatGPT – but only 44 per cent say they currently use them for client communications.

The study notes that having access to these tools and using them are two different things. Advisors’ top challenge with generative AI is that they are “hamstrung by firm policies on the technologies they can use,” the study said.

While nearly all respondents say their firms have AI strategies, 43 per cent say advisors should be more involved in shaping them.

More than half of advisors say their firms do not have established policies on how to use generative AI, although firms seem to be working to address this. Already 27 per cent of advisors surveyed say generative AI policies are in development at their firms.

Advisors surveyed say a more concrete direction is needed, with 68 per cent asking for specific regulatory guidance on working with AI. Only 32 per cent of respondents think existing rules will suffice in the future.

“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.”

Advisor360° is headquartered in Weston, Massachusetts, with offices in Bengaluru, India; Belfast, Northern Ireland; and a remote workforce in Canada.