Top 3 AI Uses For Financial Advisors Flagged In Report: Financial Planner Says Beware, Technology Is No Cure-All

Artificial intelligence may be a useful tool for financial advisors, but it will not solve their every problem.

There are three ways that financial advisors can use AI to their utmost benefit, AssetMark and Wealthmanagement.com say in a report: optimizing lead generation, segmenting the market and improving client communication.

Lead Generation

AI tools have proven to increase lead generation by as much as 50% and lower costs by as much as 60%, the report said.

“AI tools can build profiles based on names, publicly available data, and data from third-party vendors,” the report stated.

“These profiles can be compared to metrics for successful conversions, helping advisors focus attention on prospects who are more likely to become high-value clients.”

Improved Market Segmentation

AI also helps to further segment prospects based on their unique needs, the report said.

AI and predictive analytics can also help financial advisors to quickly and accurately segment their clients based on their attributes, such as assets under management, demographics and profession.

“AI tools also help identify patterns and trends advisors can use to better understand their clients' needs and preferences,” the report said.

The ability to predict client behavior and preferences enables financial advisors to further use AI to create targeted marketing campaigns and messaging that resonate with their audience,” the report said.

“Segmentation can help advisors identify potential high-value clients, allowing them to pursue leads strategically and allocate their marketing resources more efficiently by aligning them with key growth drivers.”

Better Communication

AI tools can also help advisors to prioritize and target their communications with their clients, the report said.

“Predictive tools help advisors reach out to clients proactively to provide solutions at the right time — sometimes even before clients realize they need them,” it said.

“Getting the right information to the right clients at the right time is often the key to ensuring clients take action.”

AI can also give advisors a hand at creating engaging content for clients and also help them to write emails, social media content and website copy for clients more efficiently.

“Advisors can gather questions from clients, for instance, and use AI to generate custom content based on their inquiries that are specific to niche client needs,” the report said.

AI Tools ‘May Be Useful To Some Extent’

But AI is not the end-all, be-all solution for financial advisors, Canadian financial planner Jason Pereira wrote for Kitces.

“It may be helpful for advisors to take a realistic approach to the value that AI tools will provide, especially in an environment where technology providers often make bold claims about their solutions’ ability to save time and reduce costs,” he wrote.

“Some of the capabilities of today’s AI tools (e.g., automating workflows or retrieving client information using a chatbot) may be useful to some extent, but if the processes that they replace don’t take that much time to begin with, then the tools’ benefits may not justify the additional cost to implement them.”

It will most likely take 10 years for AI tools to develop to the point where they can help financial advisors in a meaningful way, such as reducing headcount by 50%, he said.

Price Action: Financial Advisory firms trended upward into Thursday’s mid-afternoon trading.