AI-n’t no thang, but a chicken wing.

It’s easy for financial planners or wealthtech entrepreneurs to say: “AI is not going to replace human advisors.” However, that was before last week, when the digital-first custodian Altruist launched an AI-powered tool on its Hazel platform. The program’s debut spooked investors, and wealth management stocks took a tumble. Charles Schwab’s stock sank almost 11%, and Morgan Stanley fell nearly 5% last week. Meanwhile, LPL and Ameriprise saw their stocks drop 13% each.

“What we’re likely to see is some periodic volatility as new tools are announced and investors and analysts reassess competitive advantage in real time,” said Brian Storey, head of multi asset strategies at Brinker Capital Investments, adding that he doesn’t see it as a wholesale shift in how investors value advisory models.

21st Century Digital Boys

Despite the sharp sell-off, Wall Street’s biggest wealth managers aren’t downplaying the future of the technology, but doubling down. Executives at major firms said they’re expanding AI across their wealth units. It’s the latest development in the race to monetize AI, a technology that many believe will end up reshaping the wealth management industry itself.

AI has already become a co-pilot for advisors, taking meeting notes, drafting emails and assisting with research. Now, the industry’s largest firms are pushing further into automation. Morgan Stanley Head of Wealth Management Jed Finn said during a conference last week that the firm is building AI tools across “three broad buckets of functionality.”

• The first expands on the company’s existing co-pilot features, enabling systems not just to retrieve information but to execute tasks like opening accounts or changing beneficiaries.
• The second is an AI agent capable of interacting directly with clients.
• The third is a portfolio construction engine. Advisors submit client financial goals and timelines, and the system takes care of asset allocations.

“The human relationship is the whole point,” said Reed Colley, president of Orion Advisor Technology. “The advisors who thrive will use AI to be more present with clients, not less.”

Constant Change. Schwab is deploying AI in call centers to help staff respond more quickly to clients and has identified more than 200 potential use cases across the business, CEO Rick Wurster told Barron’s. Schwab also took a minority stake last year in Wealth.com, an AI-powered estate planning platform. “Technology has changed a lot in our business over the past 51 years, but we have always been part of that change and led it,” Wurster said.

Growing up is hard.

Wealth management firms brought on two new staff members on average over the past five years but will need four to six more over the next five years to keep up with demand, according Schwab’s latest compensation report. Based on current AUM and revenue trends, the industry as a whole will need to employ more than 70,000 new staff, including both advisors and administrative roles, over the next half-decade. The numbers reflect increasing pressure on advisory firms to bring on new talent, specifically younger advisors, as the battle for new recruits heats up.

“If [firms] can’t meet their hiring needs, they feel that in their productivity,” said Schwab’s managing director of advisor services Lisa Salvi, whose team leads the study. “Their staff will tell them. They feel it in how strained they are.”

Growing Pains

Not surprisingly, compensation is the top driver of employee happiness, more so than everything from equity to vacation to sick days. Total cash comp increased by 23% over the past four years, according to Schwab’s study, but the way it broke down varied depending on the role:

• About 91% of a client service associates’ compensation came from their base salary, compared to about 8% from performance-based pay.
• Meanwhile, only 44% of a managing partner’s pay came from their base salary, while 42% stemmed from owner profit distributions.

As the talent war intensifies, nontraditional benefits like mentorship programs, are also becoming a key strategy. For firms looking to understand what makes their teams tick, simply asking is the first step, Salvi said. One firm actually discovered that their employees cared most about pet insurance. (Hey, vets can get expensive.) Another firm Salvi worked with employs avid horseback riders and gives team members time off to go riding during certain seasons. “You can get really creative,” she said.

Goodbye Notetakers. Another way firms can keep up with demand is by updating their job descriptions. With the advent of AI, particularly notetakers, some tasks will have to be updated to reflect what technology might take over, Salvi said. “Whereas that first junior role might have been a client service associate who would sit in the meeting and take those notes, in most firms that have really adopted [AI] notetakers, that’s not necessary anymore,” she said. “It’s shifting the mix of their responsibilities. It’s not going to look the same as it did even just one year ago.”

The stereotypical advisor wears tailored suits, drives a luxury car and spends weekends working on their golf swing. Not anymore.

While the traditional Wall Street persona still works for some, just like portfolio management, it isn’t one size fits all. For many advisors, the buttoned-up, country-club professional script can feel inauthentic, and authenticity is increasingly what clients want. “There’s a huge opportunity for planners and advisors to show up in a more raw, unpolished, slightly messy way,” said Philip Olson, co-founder of Solstice Wealth and host of the Two Cents PBS show. “So many clients are just starving for that.”

Heart on Your Sleeve Tattoo

Olson has arm sleeve tattoos, long hair, painted nails and he often wears cut-off t-shirts at the office. A self-described theater nerd who plays in a ’90s cover band, he’s open about his political and social views and is unapologetically casual with clients. “It becomes less professional and more personal,” he told Advisor Upside. “I’ve attended clients’ weddings and funerals. I consider that a huge honor and the way it should be, frankly.”

That approach isn’t for everyone, and that’s the point. His clientele skews more toward people with non-traditional gender, sexual expression and relationship models. “It’s people who generally feel disenfranchised by the mono culture that most ‘big finance’ gives,” he said.

The business itself has evolved, too. What was once largely investment management is now deeply rooted in financial planning. As retail and DIY investing platforms proliferate, clients need more than portfolio construction; they want connection. A 2025 report from advisor directory Wealthtender found that:

• Nearly 90% of clients’ reviews of their advisors centered on relationship quality, planning advice and emotional factors.
• Clients are nearly 25 times more likely to mention their advisor by name than the firm, highlighting just how important personal connection is in client-advisor relationships.

“We actually had a prospective client breathe a sigh of relief when he saw that my teammate sported purple dyed hair,” said Sam Mockford, a CFP with Citrine Capital. He admitted that he’d been putting off finding a financial advisor for some time because he loathed the idea of working with “a bunch of f****** suits.”

Make ‘Em Laugh. Humor can also help bridge that gap. Sean Williams, founder of Cadence Wealth Partners, sends prospective clients a welcome video parodying The Office and fills his team’s website bios with self-deprecating humor. His own bio describes him as a Marine, bald, moderately intelligent and a hater of closed-toed shoes. He even crafts welcome gifts in his woodshop for new clients.

“Ultimately, when we are representing our authentic selves, it builds trust with clients more quickly and lowers barriers to conversation,” Williams told Advisor Upside. “They see us as real people.”