COACHES CORNER

AI and Advisor Profitability

By Mike Byrnes

The advancements in artificial intelligence (AI) are no longer science fiction. Changes are happening at a pace never seen before. To think significant transformations are not on the horizon is foolish.

AI is not just a technology tool; it is a transformative force that accelerates innovation beyond our limitations. Data processing and even decision-making will be made at a pace not possible for humans. AI will continue to evolve and adapt, with machines understanding human needs, automating complex tasks in milliseconds, and solving problems we never could on our own.

Advancements will reshape everything from healthcare to space exploration. Financial planning will not be immune to the rapid pace of change coming from artificial intelligence.

How Will AI Advance the Financial Planning Industry?

Like any technological change, a minute number of financial professionals will quickly adapt to the accelerating pace of change and then the rest will follow. This time, the stakes are higher, because AI will deliver a huge competitive advantage, even delivering exceptional client service. Some will be asleep at the switch, while others will be quicker to take part in the transformative evolution. The stronger motivation to quickly adapt this time around is because advisors will not have to work as hard and can make more money at the same time. Who does not want that?

At first, we will see these advancements in core competencies of the financial planner:

Customized and improved investment management—The integration of AI into data review and predictive analytics will enhance portfolio management returns, eliminating inefficiencies and mitigating risks, all with less and less human input. AI is already informing, forecasting, and improving investment strategies.

Clients will not have to be stuck with one-size-fits-all investment models. Their investments will be optimized with much more advanced asset allocation strategies tailored to individual needs and goals—in real time.

The current amount of effort needed for rebalancing, tax-efficiency, ESG screening, and other investment considerations will be automated, with AI virtually eliminating manual work while improving precision.

AI solution: Seeds Investor is an example of the future portfolio construction clients will require. It implements advanced AI-driven insights and automation, empowering advisors to deliver truly customized portfolio management. Seeds goes beyond traditional risk assessments by understanding each client’s unique goals, values, and investing behaviors, ensuring every investment strategy is tailored in real time. With seamless tools for tax efficiency, automated rebalancing, and ongoing account maintenance, Seeds minimizes operational burdens and maximizes meaningful client relationships, so advisors can focus on what matters most.

Hyper-personalized financial planning—Gathering more client data than ever before, AI will produce better customized financial plans and integrate predictive analytics, behavior, and market insights to revise plans in a way the industry has never seen before.

Just like doctors are using AI to make better diagnoses and recommendations to patients, natural language processing (NLP) tools will allow advisors to make faster and more informed decisions.

Financial planners’ core competencies will be redefined. AI will help them make better recommendations, so advisors will need to become increasingly centered on the human elements of financial planning, like behavioral coaching. Empathy, intuition, and personalized guidance will be examples of how advisors will bring value to the client relationship. But advisors will not have a monopoly on this part of the provided services, as AI is also making advancements in the area of emotional intelligence.

AI solution: InterGen Data helps with predictive analytics, empowering businesses to anticipate 95 major health and wealth life events with unmatched accuracy. The platform enables financial, healthcare, and insurance organizations to proactively personalize services, strengthen customer relationships, and drive growth by transforming billions of data points into actionable insights.

AI-powered client-facing service—This is one of the hardest things for advisors to believe but it will happen: AI will start to own part of the client relationship. What we have experienced with chatbots and voice assistants so far will be vastly improved. AI hallucinations will become less and less of a concern. Clients and prospects can receive instant answers at any time, day or night, weekday or weekend.

Look at how scheduling meetings no longer needs as much human interaction. Now imagine AI providing financial education, improving clients’ financial literacy. Then AI advances to provide personalized advice and improved follow-through so clients become better at taking the advice.

AI will streamline operations, reduce costs, and enhance client interactions. At some point, AI will provide better service than advisors can currently provide. We are just starting to see the beginning of a shift from human-only to hybrid human-and-AI service models.

AI solution: Zeplyn takes over the manual processes slowing down advisors and support staff, freeing them to focus on what they do best: building human-to-human relationships. These advanced tools empower everyone in a firm to “reach up” and achieve more, while technology handles the time-consuming tasks that create drag in daily workflows, driving efficiency and personalized advice at scale.

Safer compliance oversight—Before using AI, privacy, security, and legal concerns needed to be addressed to keep clients’ trust intact. Protecting client information and data is vital to advancing with any technology solution. While AI will improve fraud detection, it will also face increasingly sophisticated cyber threats.

Regulators will do their best to keep up with AI but ultimately it is the advisors who will need to always be vigilant safeguarding their clients, even if they do not receive the proper guidance.

With that said, financial regulations will likely become more complex but AI can help ensure adherence. AI will streamline compliance, particularly with regard to documentation, suitability, and fiduciary responsibilities. AI will assist in monitoring communications, flagging issues, and even correcting them. It will ensure recommendations align with firm policies and client profiles.

Servicing clients will be faster with AI and less prone to errors, reducing financial litigation risks.

AI solution: Praxis Solutions delivers AI-powered consulting and custom software to help wealth and asset management firms streamline operations and enhance decision-making. Kaia, the intelligent due diligence assistant, can review and extract insights from structured and unstructured documents at a rate of roughly 100 pages per minute—identifying key risks, performance history, regulatory issues, and more to dramatically improve the speed, accuracy, and consistency of due diligence.

These productivity advancements free up advisors to spend more time on complex planning and improved holistic wealth management. Value-added work will increasingly shift to building stronger relationships with clients, prospects, and strategic alliances, leading to increased growth.

And There's More

Here are more ways improved growth can take place for the advisor who takes advantage of what AI can provide:

Better use of time for increased referrals—Currently, advisors and their teams do so much mundane work. They are not fully focused on strategic planning and relationship-building, like they should be. AI will free them up to be human-facing more than ever before, allowing for more client referral introductions and strategic alliance partnerships.
Client segmentation and enhanced prospecting—Better strategies will evolve beyond segmenting for net worth or income. AI will also identify target markets based on behaviors and psychographics. Life-stage milestones and triggers for advice will be easier to identify with AI, so the advisor can be in front of the prospect when the prospect most needs the advice.

AI solution: Cashmere is an AI-powered analytics platform used by data teams, marketing teams, and advisors to surface high-potential prospects—both within existing records and externally. It integrates into workflows to deliver prioritized opportunities tailored to each advisor’s strategy, ensuring timely, actionable insights.

Advanced digital engagement—Online targeted marketing can happen at a pace never seen before. Mass communications will be a thing of the past, with recipients believing messages they receive to be personalized for them. Efficient lead nurturing will move the prospect to conversion faster than ever before. Pipeline management will be driven by AI, with machine learning scoring leads, automating outreach, and getting advisors in front of more people. ROI on marketing efforts should be significantly improved.
Increased profitability—Advisors will be able to grow at a faster pace. AI advancements will lower staffing needs, which will reduce human capital costs, making businesses even more profitable.

A Whole New World

The old saying about “just seeing the tip of the iceberg” has never been more accurate. AI is already enhancing efficiencies, increasing sales, and making businesses more profitable. Advisors should be cautiously optimistic for what artificial intelligence advancements unfold in the coming years.

Mike Byrnes is a national speaker and owner of Byrnes Consulting, LLC. His firm provides consulting services to help advisors become even more successful. Learn more at ByrnesConsulting.com and follow @ByrnesConsultin.

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