Your Take: How Financial Advisors Should Use AI

Generative AI tools created by Magnificent Seven companies grab headlines. While powerful, these generalized AI engines often lack the specialized framework needed to drive efficiency in advisory workflows. So how are financial advisors using this technology right now?

In the past two years, we've witnessed an explosion of AI tools for complex, unpredictable tasks that were previously time-consuming and error prone. Vendors now offer tailored solutions that are directly applicable to an advisor's practice, workflow and client-facing materials. 

How Financial Advisors Can Use AI

Financial advisors are currently leveraging AI across six primary use cases:

1. Marketing + Content Creation: AI tools assist advisors in creating emails, social media posts, and newsletters. Advisors can converse with a chatbot for inspiration and a first draft or use an AI tool for polish. This is how most advisors start with AI. Out of the box tools like ChatGPT and Gemini do a good job, and advisor marketing tools like Snappy Kraken are fine-tuned for compliant language and advisor workflows.
2. Segmentation + Lead Optimization: Prospecting tools like AIdentified and Catchlight help you find leads that meet your criteria and predict which are most likely to convert. Client-focused tools like Responsive automate tasks and suggest next best actions, e.g. scanning patterns in direct deposits to predict changes in employment.
3. Compliance: Advisors and compliance departments can auto-screen public communications for compliance flags with suggested changes and disclosures through tools like Hadrius. Firms can also monitor the news for changes in regulations and summarize required actions for compliance with tools like Regverse.
4. Notes + CRM: New tools join client meetings to produce a transcript, summary, next steps, draft follow-up emails, and even evaluate your engagement levels. These tools save time while taking arguably better notes than a human. Leaders include general purpose tools like Otter and Spiky, as well as industry-specific tools like FinMate, Zocks, and Jump. Pulse360 parses meeting notes to populate your CRM fields.
5. Document Extraction: Advisors often manually enter important client information from PDFs into spreadsheets, tools, and CRMs. AI tools save time and reduce errors by automatically extracting data from documents, running validation checks, and generating analytics and reports. Tools like FP Alpha and Holistiplan help with tax documents, while YourStake and VRGL help with brokerage statements.
6. Analysis Assistant: Generative AI can generate insights about potential investments (Newt, Boosted.ai), market conditions (Morningstar, Morgan Stanley), and client portfolios (YourStake, ARQA). Advisors can run a portfolio through an AI engine to receive a list of recommendations, or ‘chat with a portfolio’ through an embedded and context-enhanced chat experience.

Each use case features multiple vendors offering AI-powered solutions. However, it's crucial to evaluate these tools holistically, considering factors such as customer service, data security, and overall cost.

Moving Past AI Hype: Three Key Considerations

When evaluating AI tools for your practice, consider the following:

1. Solve a Real Need: Focus on finding solutions to actual problems in your workflow, regardless of whether they're marketed as AI-powered or not.
2. Evaluate Service: Look for tools with high customer satisfaction ratings (e.g., in T3 and Kitces surveys). In this rapidly evolving field, companies that listen to their customers and adapt quickly often provide the best solutions.
3. Prioritize Security and Privacy: Ensure any AI solution provider has undergone a SOC2 Type 2 audit, just as you would with any other technology vendor.

Real value is generated through solutions that offer substance beyond a simple AI interface, actually solve your specific problems, and do so in a compliant and beneficial manner.

Do you have an opinion that you want to share with other members of the financial planning community? We encourage financial professionals to send us ideas for a Your Take column to [email protected].