There’s been much talk about AI recently, and we thought it would be worth evaluating how AI is set to impact advisors. As top-tier advisors know, AI isn’t going to replace those jobs, but it very might well replace jobs that call centers currently handle in the neighborhood of values $300,000 or less. The loss of any form of human advisor – client connection at the lower AUM level might put pressure on top advisors to take on more. Time will tell.
As background, models like ChatGPT, while impressive in natural language processing (NLP), are far from proficient at crunching financial figures or predicting the market’s next move as it stands currently. As an experiment, we asked ChatGPT to handpick the top 10 stocks for the rest of 2023. Its response was humble: “I don’t have access to real-time data, and my knowledge is limited to September 2021. Stock predictions are speculative and risky; it’s best to conduct thorough research and consult financial experts.” Bravo, ChatGPT, you’re no fortune-teller and you can’t do what humans can do with the benefit of an Excel spreadsheet and a financial calculator – currently that is.
As AI advances, it is likely to sharpen its numerical prowess. But here’s the kicker: the results are only as good as the inputs, and that’s where human expertise comes in. We’ll need to wield AI with sophistication, not rely on it blindly. We’re reminded of the film, “Sully,” the airplane would have crashed models demonstrate, only a human pilot with his intuition and training and response in a panic situation landed that plane safely. Humans are not replaceable in this way. No technology can ever be modeled to have human sense.
That said, AI has benefits advisors can use to make their practices more efficient, even starting today. While we won’t yet count on AI as an investment selection aid, this is to come. Currently, AI can be used to improve communications and marketing materials with clients, trouble shoot problems by inputting the proper questions into it, and by using it as a brainstorming tool for your practice. Have a wild idea that you think might benefit your practice, for fun try inputting it into ChatGPT to see what kind of interesting perspective it might yield.
Wirehouses and RIAs are already tapping into AI’s potential in the way it can currently serve business. They will continue to be on the lookout for how it can be used for portfolio building and investment selection as the technology improves. Finance never stands still, and innovation is the name of the game. Savvy advisors should be keeping a keen eye on AI, determining how it can augment a practice as it advances.
Advisors can view AI as a trusty assistant, helping to refine documents and proofread ideas, and in time, it might very well help advisors with investment selection and more nuanced efficiencies of scale in running a practice.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
