Data analysis, portfolio management, financial planning, client communications: These are all tasks that financial advisors can readily perform. So, what does it mean for you — and our industry — that artificial intelligence-powered tools can tackle these same tasks in a fraction of the time?
To answer that question, I went to ChatGPT (of course). My prompt: “What can advisors bring to client relationships that AI cannot?” Three words that stood out were empathy, trust and judgment. That’s when I realized I answered my own question.
In short, it is the client relationship that AI can’t replicate. Keeping that human touch central to your practice will be critical as AI expands its capabilities.
Artificial vs. Emotional Intelligence
AI can emulate emotion but lacks the ability to comprehend, interpret and meaningfully respond to emotions in others. For example, if you put bad news into ChatGPT, it will respond with something along the lines of, “I’m so sorry that happened.” This is simply a programmed response, however, not a true understanding of what someone is going through.
Since life events and finances are often intertwined, you’ve likely been through a lot with your clients: births and deaths, marriages and divorces, home purchases and college graduations. With the help of AI, you can quickly alter a plan and process financial transactions when the unexpected happens. But your ability to relate, often from a shared experience, allows your genuine empathy to build trust and connection.
Building Trust Takes Time
Everything you do for your clients — personalized planning, investment recommendations, guidance through market turbulence and life events — nurtures their trust in you. It’s not something you gain immediately; it’s developed over time, by your interactions, integrity and reliability. AI is not equipped to gain that kind of trust with clients.
One of our advisors recently quipped that he’s like a hairdresser for finance. I love this analogy because it captures the essence of what an advisor means to their clients when they’re fully engaged. It’s often more about being a life coach or a therapist than it is about the numbers. And, once you’ve gained that level of trust with a client, it can be the most rewarding part of being an advisor.
Intersection of Finance and Psychology
So much of long-term planning goes beyond numbers and formulas. And while AI can optimize a portfolio based on risk tolerance or seek to minimize a client’s tax burden, it can’t appreciate the emotional effects of a divorce or caring for a sick parent.
AI may offer suggested actions to someone who has concerns about market volatility but doesn’t truly know your client’s personal situation or how they’ll respond in times of crisis. And it can’t offer the behavioral coaching that’s needed to help your clients overcome such behavioral biases as loss aversion or herd behavior to make sound financial decisions.
Balancing AI and the Human Connection
It’s important to remember that AI is a tool. It can help augment the services you deliver to clients, but it cannot replace the human element. So, how do you foster better relationships with clients in the age of AI? By using it to your advantage. Here are some tips I offer the advisors I work with:
- Use AI to quickly analyze data so you’re more informed, but retain your role as the final decision maker.
- Make it part of your marketing strategy by using it to brainstorm ideas or as a starting point for content creation.
- Let it help with meeting prep or client communications, while remembering to add your personal touch to make them authentic.
- Set boundaries to separate which functions can be automated and which still need the human touch.
- Keep your clients in the know about your use of AI, and you’ll avoid risking the trust you’ve worked so hard to build.
Be the Human AI Can’t Replace
I’ll never forget a story about one of our advisors and his actions after Hurricane Katrina in 2005. He had many clients in the New Orleans area, most of whom had evacuated before the storm. Leveraging technology, he exported each of their addresses to Google Maps, then drove around checking on the homes so he could report back and put his clients’ minds at ease.
Even with continued advances in AI technology, this kind of response will only ever come from a human. It’s another reminder that, for all the data that AI can analyze and transactions it can process in mere seconds, it cannot replicate the empathy, trust and sound judgment — or the meaningful actions they inspire — that only you can deliver.
Keep that in mind, and it’s unlikely your clients will ever consider a robot a better option.
Patrick Daniel is the vice president of advisor digital solutions at Commonwealth Financial Network, an RIA/broker-dealer supporting advisors with technology, compliance and planning tools.
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