What Will Advisors Do if AI Takes Over the World?

Financial advisors have a 21% chance of being replaced by AI, according to the sports betting site Action Network. (Not to sound cocky, but journalists have only a 13% chance.)

OK, maybe an odds tool from a random website isn’t the best metric for determining whether people will have jobs in the future, but it is safe to say AI is making inroads in the financial planning industry. Currently, tools are already acting as a co-pilot to advisors, assisting them with administrative tasks as well as some investment management suggestions. Most advisors, however, aren’t too worried about AI taking their jobs, given that financial planning requires just as much human empathy and behavioral know-how as it does book smarts. But predictions from groups like Forrester that just over 6%, or 10.4 million, US jobs will be replaced by AI and automation by 2030 are forcing some advisors to consider a backup plan. 

What Are Our Options?

A person who is using AI for all their financial planning and investment needs, is likely mass affluent, someone who probably wasn’t being served by a human advisor in the first place, said Chris Diodato, founder of WELLth Financial Planning. “I’m not concerned about AI being a threat that will completely replace human advisors,” he told Advisor Upside. “I do think it will increase access for those who couldn’t access financial services prior.” 

However, he also noted that AI could deliver price-compression for larger clients who are being billed hefty AUM fees on non-complex cases. A client could have millions of dollars, but if they don’t need services like estate planning or advance tax planning, why would they pay an advisor for something a program could do for a much lower price

In addition to his advisory practice, Diodato has side gigs, helping other firms automate and streamline their operations, as well as ghostwriting and content creation. “If AI replaces financial services, I have a hunch that writing would also have the potential to be replaced,” he said. “In other words, there might not be anywhere to hide from AI besides a blue-collar, hands-on career.”

Training Your Replacement

One wealth firm is actually counting on AI replacing its employees. Range is an RIA startup with 25 financial advisors managing $700 million in assets. In an interview with InvestmentNews, company CEO Fahad Hassan said, “Over the next one to three years, our plan is to eliminate our own advisor base,” as the company further develops its AI wealth management tools. 

While that strategy may sound a bit dystopian, Pamela Horack, founder of Pathfinder Planning, noted that when you break down Range’s current numbers, it has each advisor managing about 120 households at an average of $225,000 per account. “Given that asset level, it sounds like their clients do not need the same depth of sophistication provided by an in-person CFP,” she said. “I tell people that I don’t do the math; that’s what computers are for. My job is to serve as a thought partner and interpret the numbers so our clients can feel confident about their future.”

Think About the Children. Established financial planners already have robust books of business, but that’s not the case for the next generation of advisors, said Katrina Soelter, vice president at Equalis Financial. “When you’re first getting started, a lot of those early jobs are uploading client documents into planning software, reviewing them and providing feedback to lead advisors,” she told Advisor Upside. “That’s an area that AI could take over if it’s cheaper.” 

Soelter sees herself adapting to whatever AI has in store, but if she had to leave financial planning, she would move to a related field  like financial therapy or bill pay for seniors. “I’d go to the outer spokes of wealth management in some form rather than doing a complete 180.”