AI enthusiasm growing among financial adviser

One in three financial advice professionals is using artificial intelligence (AI) to do their job, according to the research from NextWealth.

This figure is up 28% from last year, suggesting a dramatic drop in AI scepticism in the financial advice industry.

Dramatic increase in financial advisers using AI 

In 2023, NextWealth’s research showed that only 6% of advisers were using AI in their businesses. According to its 2024 ‘Adviser Reviews Report’, this figure has jumped significantly, with 34% now engaging with AI in their day to day work.

This shift in attitude towards AI can also be seen in the proportion of advisers that say they are ‘not using AI, not fit for purpose’. Last year, 29% of respondents said they fell into this category, whereas in 2024, only 7% fit this statement. 

Large firms leading the way 

The report revealed that advisers in larger companies are more likely to be using AI than their counterparts in smaller firms. In firms with more than 10 advisers, 43% reported using AI. However, less than 1 in 5 (19%) one-man bands have implemented AI. 

Majority taking a ‘wait and see’ approach

The majority of financial advisers (52%) are interested in AI but are taking a ‘wait and see’ approach, particularly in smaller companies it seems. One founder of an advice firm described it as wanting to learn from others’ mistakes first: “I’m a sole practitioner, in an industry of firms which are probably 90%, bigger than me, I’ll let them make the mistakes. And I’ll just navigate it myself. Do I need to be leading the charge, or do I just need to be aware of what I’m interested in?”

Desire for efficiency driving AI surge

Efficiency is the key driver behind the increasing uptake of AI assisted tools among financial advice professionals, according to NextWealth. 

At the moment, AI is being used in the financial advice sector to streamline processes around meeting notes, with tools available capable of transcribing meetings, creating summaries and extracting key notes, takeaways and action items. Some advisers are also putting AI to the test when it comes to drafting suitability reports. 

By allowing AI to take care of these often mundane and time-consuming tasks, financial advice professionals are freed up to concentrate on more strategic and creative aspects of the job, such as spending face-to-face time with clients and delving into more complex and interesting cases. 

We are already seeing the real world implications of AI integration, with Morgan Stanley’s CEO Ted Pick telling investors at a conference in June of this year that AI could save the bank’s financial advisers between 10 and 15 hours a week. Pick described the use of AI as “potentially game-changing” and said that its use could boost advisers’ productivity and help them to fine-tune topics to discuss with wealthy clients and tailor investment products to suit their needs. 

Citizens Bank, meanwhile, expects to see up to 20% increase in efficiency due to generative AI ‘co-pilots’ working alongside employees in activities such as coding, customer service and fraud detection. It’s thought that in future these co-pilots could be used to help tailor investment strategies in real-time and predict trends in the market. Ultimately, using AI in these ways could help to set financial advice firms apart from the competition and deliver better outcomes for their clients. 

AI predicted to make compliance easier 

It’s also thought that AI will transform compliance checking for small firms in the financial advice sector. NextWealth’s ‘Future of Financial Advice’ report, which was published in February of this year, predicted that AI will help to reduce the regulatory burden on advisers in small firms (up to 100 employees and up to £10m in revenue) by supporting the scaling of compliance checking. 

With the same report finding that regulation is viewed as stunting the growth of the advice market, AI’s ability to create “a more manageable interface with the regulator” presents a welcome opportunity. 

AI’s place in client interactions

AI is predicted to come into play in client interactions too, with tools being used to listen to client-adviser conversations and suggest follow-up questions and responses. This method could help advisers to uncover more meaningful information about a client’s financial situation and goals and tailor their advice accordingly. This blend of personal touch and AI could also help to strengthen the relationship between the client and the adviser. 

Best investment opportunity for next 24 months

The appetite for AI shows no sign of slowing down any time soon either. Research by financial services company Capital Group suggests that AI is a top investment priority among financial advisors, with the majority of advisers (71%) regarding AI as the best investment opportunity for the next 12 to 24 months. 

The financial services industry as a whole is predicted to increase its AI spend from $35 billion in 2023 to $97 billion by 2027.

Hybrid approach

Once feared and shrouded in mystery, it seems that AI is finally coming out of the shadows in the financial advice industry, with more and more advisers leveraging it to create operational efficiencies and achieve better results for their clients.

In a time of such rapid change, however, it’s important not to lose sight of the basic principles of good financial advice. At Simply Academy, we are committed to helping our students gain the insight and understanding they need in order to have a successful career in the industry. 

Our DipFA qualification is a recognised professional qualification in the UK for individuals interested in pursuing a career in financial advice. This diploma is generally geared towards people who are looking to change careers or those working in financial services that want to be able to provide advice on things like investments, insurance and retirement planning.