Clients ARE Bullish on AI. Advisors Need To Understand Why

Owing to a groundswell of enthusiasm for the burgeoning investment thesis, advisors are likely fielding more client inquiries regarding artificial intelligence (AI).

Add to that, ChatGPT and the like are garnering increasing amounts of mainstream coverage. With that, there’s increasing speculation that AI will supplant a slew of jobs. Some even fear Hollywood-esque scenarios in which AI-driven robots become too smart to control. That’s a bit much, but it underscores the point that AI is a top-of-mind issue for clients.

What’s important to advisors is understanding how clients perceive AI and that includes the point that they look at AI is more than just an investment opportunity. They view it as a disruptor to the financial services industry, including asset management and advice.

Fortunately for advisors, that scenario isn’t as ominous as it sounds. While clients across all demographics are increasingly tech-savvy, data indicate they still want a human touch.

Advisors, Heed Data in this Survey

Morgan Stanley Wealth Management recently published the results of its quarterly investor pulse survey and it contains some AI-related nuggets advisors should pay attention.

The vast majority of investors “(72%) of investors believe that AI is a game changer for investors and traders and nearly three out of four (74%) believe the technology will help Financial Advisors (FA) better serve their clients. In fact, over three out of five (63%) would be interested in working with a Financial Advisor that leverages it,” according to Morgan Stanley.

Translation: Advisors that can credibly show clients that they are increasing use of technology, including AI, are likely to find a receptive audience. That’s a good thing. Need more convincing? Consider the point that coveted younger clients are the ones that see value in an advisor having an AI platform. Importantly, they still want the human touch.

“In particular, 35-44 year old investors over index from the general population in their views that AI will be a game changer (87% v. 72%), that it will help FAs better serve clients (89% v. 74%), their interest in working with an FA who leverages it (85% v. 63%), and their belief that AI will not replace the FA/Client relationship (84% v. 82%),” adds Morgan Stanley.

Regarding the human touch element, more than 80% of those surveyed believe AI will never replace human financial advisors and nearly 90% “agree that the human-to-human FA relationship is extremely important.”

AI’s an Additive Tool, Not Panacea or Replacement

Both advisors and clients alike would do well to remember that AI is not a silver bullet for foolproof investment success. No, it’s not going to help any market participant “bat a thousand.”

Still, AI has the potential to be beneficial to advisory practices and clients. When properly harnessed, AI can bolster practice efficiencies and perhaps improve various forms of client interaction – two good things to be sure.

“While AI is clearly groundbreaking, and we are just scratching the surface of its potential impact within financial services, this data aligns with an insight we’ve known for some time: The clients who are most engaged with their Financial Advisors are also the most satisfied,” said Jeff McMillan, Head of Analytics, Data and Innovation for Morgan Stanley Wealth Management. “Within this context, AI should be viewed not as a replacement of human guidance, but as a powerful tool to help turbocharge a Financial Advisor’s practice management and client interaction capabilities.”

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