Artificial intelligence could wind up magnifying the anticipated advisor shortage rather than averting it, industry expert Michael Kitces suggested this week.
"Are we trying to get a productivity boom from AI to solve our talent shortage that will then drastically exacerbate our talent shortage because we gut our own talent pipelines?" Kitces, chief financial planning nerd at Kitces.com and head of planning strategy at Focus Partners Wealth, asked on the Nerd's Eye View podcast with Carl Richards, a client communications specialist.
"I can tell a story that the most successful advisory firm 20 years from now will be the one that completely eschews all that AI stuff, because they'll have humans who spend the next 20 years learning how to be good advisors," the author and speaker said.
Meanwhile, he said, firms that lean heavily into AI face a risk: "By eliminating all these back- and middle-office tasks to free up the time and have better margins and bring down the costs, ideally good things, they gutted all the entry-level jobs that train everybody to eventually get to the end-state job where you're an experienced advisor."
Advisory firms have started to embrace AI as waves of advisors near or enter retirement. The industry will face a shortage of roughly 100,000 advisors by 2034, McKinsey & Co. has estimated.
"I feel like we've shifted from, 'AI is the threat' to now, 'no, no, no, AI is going to solve the talent shortage by making us hyper efficient so we can all handle way more clients at a lower cost and expand the reach of advice,'" Kitces said on the podcast, adding that he "would love to see advice expand and reach more" people.
But he also sees problems with the notion of AI lightening advisors' administrative load so they can spend most of their time in client meetings.
"Spending 80% of my time on clients because technology made all the other parts of my job disappear does not actually sound very happy. ... Maybe this is me, but I don't know a lot of people who relish the idea of six hours a day, every day in client meetings, and not the light, fuzzy client meetings," Kitces said.
There are hard conversations, he noted.
"There's a lot of emotional investment," Kitces said. "Not every client discussion is happy or positive. Sometimes we have to break hard news or help them transition through difficult things. ... This feels very weirdly dystopian to me if we actually move towards this outcome."
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