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Automate Advice, Not the Advisor

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Advisors have been using tools and technology for decades. Why, then, should the latest technology be any different? Robo-advice is no more than artificial intelligence (AI) technology[1] applied to financial advice. In contradiction to the thought that robos will replace the advisor, this technology can greatly enhance an advisor’s practice.

This threat is only real if the advisor hands clients over to AI. Many advocates of AI offer a business model in which low-value clients are handed off to the robo. This is a recipe for disaster, because today’s low-value clients have high-value family, friends and business relationships and probably will become high value in the future. At the same time, high-value clients are deprived of the benefits of AI.

The smart advisor will use AI but keep every client very close! There are a number of ways to keep clients close while taking advantage of AI. The advisor needs to understand the clients and help them to manage the AI. In addition to the occasional conversation, the advisor can help with interpreting the robo’s questions, delivering and explaining the results and expanding on the product discussion beyond the boundaries of AI when appropriate.

Today’s AI is still only as good as the information it receives. The technology lacks the intuition to interpret observations that only a human can make using our five senses. This shortcoming is critically important and requires a human advisor to accurately translate those observations into answers that AI can actually use. For example, in one short visit or even on a phone call, an advisor can recognize the intensity of aspirations, fears and concerns, can appreciate the client’s situation at home or detect when important facts are being withheld. In the absence of intuition and multifaceted observations, ill-informed answers from clients can produce very poor outcomes.

Advisors who recognizes their own skills in these areas and then use the power and benefits of AI are likely to be very successful in the long run.

A successful AI-assisted practice will require three steps: appreciate the benefits, select the AI tool, and then integrate AI into current practices.

Appreciating the Benefits

Consider what the benefits are and how best to seize those benefits. Here are six big benefits for advisors from today’s robo technology:

  • AI produces better returns. There is no credible evidence that this is the case, but there is a widespread belief among consumers, industry experts, regulators and educators that AI is superior at making investment decisions. This belief is supported by the fact that an AI-driven chess playing computer will instantly beat more than 99% of all chess players! Advisors can use this belief in AI to their advantage.
  • AI is compliant. Once proven to be compliant, the AI process can be relied on to be consistent and eliminate the day-to-day threat of noncompliance. This is true until there is a change, at which point compliance will need to be re-established.
  • AI is scalable. When properly implemented there is no practical limit to how many clients can be supported by AI. There are, of course, human limitations to the servicing that is needed for clients.
  • AI is fast. Unlike the human model, the AI computer can give virtually instant responses to the most complex circumstances. Advisors can respond to clients in seconds instead of days, hours or even minutes.
  • AI is cool. Yes, there are bragging rights for advisors who implement their own methods into the AI. Imagine the same process that has proven successful for years being performed at the speed of light.
  • AI maintains documentation. The recordkeeping that most advisors find burdensome and others absolutely hate can be remembered with relics like stock certificates and hand calculators!

Selecting the AI Tool

In evaluating AI in the investment industry over the last five years, one thing has become abundantly clear: The quality of offerings differ greatly. While some offerings are comprehensive, several are highly specialized and others rather primitive. These findings underscore the importance of careful selection, knowing what to ask and how to interpret the answers. The selection process also serves to improve the quality of available tools as competitors seek to gain the favor of more advisors.

A few key questions for potential robo providers are:

  • Is the tool designed to supplement or to replace the advisor?
  • What securities/products are supported (stocks and bonds, mutual funds, annuities, insurance, etc.)?
  • What types of recommendations are supported (asset allocations, investment choices, financial planning, plan lineups, rollovers, retirement income, health care, debt/financing, etc.)?
  • What is the scope and source of investment and product data used in the AI process?
  • Does the tool use generally accepted investment theories?
  • Is the onboarding process compatible with the advisor’s business?
  • What client factors are considered (existing holdings, fears and concerns, needs, other assets, taxes, liabilities, etc.)?
  • Does the tool respond appropriately to different client factors?
  • Is the tool compliant with regulations and industry best practices?
  • Does the tool handle both retirement and non-retirement accounts?
  • Can the tool be adapted to the specific way that the advisor does business?
  • What support is provided to meet the specific needs of advisors?
  • Can the tool be branded to reflect the advisor’s practice?

Don’t expect any one AI provider to have good answers to all of these questions. At this time, some are better than others depending on what is most important to each advisor.

Integrating AI

As with most changes, AI is best implemented by developing a plan and then adhering to that plan. The time frames and costs will depend on that plan. At a minimum, the plan needs to address the following key issues:

  • What business. This will depend on the capabilities of the tool selected and the advisor’s own choice.
  • Which clients. Will all clients be able to take advantage of the AI tool through their advisor or will this be available only to certain clients?
  • Pricing. Will the advisor charge a fee to pay for the AI tool?
  • Establish compliance. How will the advisor (or an institution) certify that compliance requirements are being properly handled?
  • Ongoing changes. As with all technology, one can expect changes to correct problems and to make enhancements. AI will need periodic updating.
  • Internal support. Expertise in managing the AI tool will be necessary to answer questions and solve problems that are certain to arise.
  • Positioning to clients. The way in which AI is presented to clients will have a great deal to do with the long term success. If presented as a superior way to make investment decisions, there will be one reaction. On the other hand, the reaction is likely to be very different if AI is presented as a low-cost method of serving low-value clients!
  • Changes to marketing. Once implemented, AI needs to play a prominent role in an advisor’s marketing. The benefits that apply to clients need to be highlighted.
  • Answers to FAQs. Advisors must also identify the questions that are most likely to come up and develop appropriate answers that are consistently used whenever those questions arise.


As the automobile replaced the horse and buggy over 100 years ago, AI will certainly replace the decision-making process used in the financial industry today. The questions are who will adapt and how soon. While the nature of the role may change, there will always be a need for financial advisors who attend to the financial well-being of their clients and clients who value those advisors.

[1] Accenture research on the impact of AI in 12 developed economies reveals that AI could double annual economic growth rates in 2035 by changing the nature of work and creating a new relationship between man and machine.

The impact of AI technologies on business is projected to increase labor productivity by up to 40 percent and enable people to make more efficient use of their time.


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