The Impact of AI Tools on Financial Planning and Four Ways to Stay Ahead

Artificial intelligence (AI) is revolutionizing the way business is done in many industries. With about 42% of large-scale organizations actively using AI tools in their business, the financial services industry is no exception.  Individual use of large learning models (LLMs) like ChatGPT and Bard has also grown exponentially, including AI-powered software and AI based financial advisors. 

This begs a couple of very important questions. What does the rise of AI mean for the potential future of financial advisors, their clients, and individuals seeking out financial advice? And how can advisors leverage AI in their business to maintain a competitive edge, deliver more value, and grow revenue faster?

Here, we’ll look at the challenges, opportunities, and impacts of AI on the field of financial planning while highlighting several AI tools for financial advisors who want to use technology to enhance their efficiency and gain more new clients faster. 

How are AI based financial advisors impacting the field of financial planning?

In August 2023, PortfolioPilot became the first AI-powered investment platform to be approved by the SEC as a registered financial advisor. PortfolioPilot uses Global Prediction’s Economic Insight Engine along with an AI trained to give users “actionable and unbiased advice in less than 10 minutes.” 

The platform gained more than 15,000 users and over $6 billion in assets under management within the first two months of its launch. This serves as a prime example of how just one AI financial advisor platform among many is looking to gain market share in the financial advisory world.

In addition to portfolio analysis, net worth aggregations, and risk tolerance assessments, an AI based investment advisor like PortfolioPilot is designed to provide personalized recommendations based on user input such as retirement or savings goals – all available within minutes. 

The capabilities and limits of AI based financial advisors

While many robo-advisors have traditionally focused mainly on investment and portfolio management, the latest AI-powered advisory platforms go further by offering a greater range of applications that may include:

• Risk management
• Fraud detection
• Customer service
• Market trend prediction

The limit of the recommendations provided by AI based financial advisors, however, is that these tools only take into account the input that a user provides. This input is unlikely to include important elements that can’t be answered through questionnaires or data-gathering tools alone. 

A client’s health, family relationships, and business or career goals may have a significant impact on their financial plan. Yet without talking to the client to dive deeper into these topics and watch for non-verbal clues, AI will never be able to replace the guidance that only a human financial advisor can provide. In addition, even though AI itself might be unbiased, it doesn’t have the personal skills to help clients overcome common investment bias – especially in turbulent market periods.

So how can financial advisors use AI-powered technology to their advantage? Below is an outline of 4 ways and financial advisor AI tools you can strengthen the natural human connection with clients, improve productivity, and grow your practice.

1. Reach more qualified prospects with AI-powered marketing tools

AI can be a great tool to help you acquire new clients through lead generation and marketing. With AI-powered software that leverages targeted marketing techniques and saves you time in creating marketing assets, it’s much easier to find qualified prospects who are looking for someone to help them with their finances. 

You can use generative AI as part of your digital marketing strategy to brainstorm and create content such as social media posts, blogs, emails, PR articles, and ads designed to increase brand awareness and help you reach more people online.

You can further the success of your digital marketing strategy with AI designed to leverage search engine optimization (SEO) to recognize patterns in what users are searching for online so you create content that puts your business in front of more qualified prospects. 

AI for financial advisors to boost their digital marketing

Catchlight – Catchlight uses AI to help advisors find and capture prospects that are most likely to convert into clients. 

Hypotenuse – Hypotenuse is a generative AI that creates content such as blogs, articles, artwork, and emails while also integrating SEO keywords as needed.

Shown – Shown is an ad manager software that uses AI to create and run your ad campaigns across multiple platforms.

2. Reduce administrative costs with AI to increase productivity

In addition to landing new clients with more streamlined marketing, you can also use AI to help existing clients faster without sacrificing quality of service. With productivity-focused AI tools, advisory teams can speed up the resolution of problems or admin tasks without pulling an advisor away from high ROI activities such as relationship building, financial planning, and investment management.

One way to reduce admin costs is to lean on AI to gather data to prepare for client meetings, take notes at meetings, and prepare summaries and action plans that advisors and client associates can use to follow up after prospect and client meetings.

You can also leverage AI that uses predictive text to analyze sentiment to draft responses to client or prospect inquiries in a more timely manner. You or your client associate can then review, edit, and expand upon AI-generated responses while adding elements of human touch to deepen relationships. 

Financial advisor AI tools to reduce administrative tasks

Otter – Otter is an AI meeting assistant to record, transcribe, and summarize your prospect and client meetings.

Clickup AI – ClickUp AI is a productivity assistant that sets up workflows and action items for different roles across the team while providing summaries of task updates.

Aveni – Aveni uses AI to generate investment reports, take notes on client calls, brief your client associates, auto-populate your CRM system, and create follow-up emails.

3. Optimize portfolios and investment management with AI

Technology has made it easier than ever to review, adjust, and monitor investments and portfolios. Some firms already have technology in place to alert advisors when a client’s portfolio is outside of pre-determined risk guidelines or parameters. There are also AI tools to generate ideas for suitable replacement strategies so you can make timely portfolio adjustments. 

Because AI is exceptionally efficient at analyzing large volumes of data, it can simplify ongoing investment research tasks. AI-powered investment management tools can help you analyze securities, spot trading patterns, or filter out long lists of potential investments to find ones that are best aligned with certain market goals. 

The rise of AI is also increasing the growth of rules-based and algorithm-based investment strategies such as Smart Beta ETFs, giving you and your clients a wider range of lower-cost investment strategies that can be used to capitalize on market trends or achieve specific goals.

AI tools for financial advisors to optimize portfolios

Danelfin – Danelfin is an AI-powered analytics platform to find top stock and ETF ideas using over 900 technical, fundamental, and sentiment indicators of each stock.

Boosted – Boosted uses AI to analyze stocks, earnings calls summaries, and provide watchlists and buy/sell suggestions based on your investing preferences.

Axyon – Axyon uses AI to rank strategies and investments across multiple asset classes and provides performance forecasts backed by explanations.

4. Expand the scope and value of financial planning services with AI

How can you demonstrate your unique value so that clients know it’s worth working with you instead of choosing an AI based financial advisor or using an AI tool to handle their finances alone? By showing how you help clients achieve tangible goals that go beyond simply providing higher risk-adjusted portfolio returns. 

From helping clients simplify estate planning strategies to effectively pass on their wealth or assisting with tax planning throughout the year, AI-powered tools can help you expand the scope of services you provide beyond traditional investment management. This can include helping your clients:

• Transform unstructured estate documents into clear, easy to understand visuals
• Extract key information from estate and tax planning documents to integrate into their financial plan
• Strategize ideas for financing their next business venture
• Calculate the savings needed to retire early
• Figure out how to fund their newborn’s or grandchild’s college fund 

If you’re an advisor with a holistic approach to financial planning, you may already be providing a much broader range of services than any robo-advisor or AI based financial advisor out there. If not, consider using the latest AI tools to expand and showcase the breadth of services you offer such as help with estate planning, lending, or 401k plan analysis.

AI tools for financial advisors to expand the scope of their services

Vanilla – Vanilla is an estate planning software for financial advisors that turns estate planning documents into helpful diagrams, beneficiary summaries, and federal and state-specific estate tax projections. Advisers can receive guidance from V/AI Chat as they help build client estate strategies. V/AI Chat answers practical estate planning questions sourced from a curated corpus of estate planning content.

UPTIQ – UPTIQ uses AI to help advisors connect clients to a network of lenders who can fund any liquidity objective and thus preserve advisors’ AUM.

401kAI – RiXtream’s 401kAI helps advisors land more retirement plan business by analyzing 401k plans and the investments within each plan.

Where humanity and AI meet to help advisors and clients achieve their goals

No matter what AI tool for financial planning you decide to use in your business, nothing can ever replace the value you provide by relating to others as a fellow human being – one who encourages their dreams, understands their challenges, and helps them take advantage of opportunities. 

While there are hundreds of tools out there, the best AI tools for financial advisors are the ones that fit their practice and help them build more meaningful relationships with prospects and clients alike. 

We hope you can use the tips above to find your unique approach to adapting AI in your practice so you can grow your business and increase your impact with less stress and more ease.

The information provided here does not, and is not intended to, constitute legal advice or tax advice; it is provided for general informational purposes only. This information may not be updated or reflect changes in law. Please consult with your financial advisor or estate attorney who can advise as to whether the information contained herein is applicable or appropriate to your particular situation.