Investors bullish on AI as a financial advisor tool

The majority of investors surveyed believe that artificial intelligence is a game changer and will enable them to better serve their clients.

Seven out of 10 of investors believe that AI is a game changer for investors and traders, and nearly three out of four (74%) believe it will help financial advisors better serve their clients, according to a recent Morgan Stanley Wealth Management individual investor pulse survey. In addition, over three out of five (63%) would be interested in working with an advisor who leverages it.

But AI will not take the place of human guidance, the survey said. Over four out of five investors (82%) believe that it will never replace human guidance, and nearly nine out of ten (88%) agree that the human-to-human advisor relationship is extremely important.

Young investors most enthusiastic about AI

And, perhaps not surprising, enthusiasm for AI is the most pronounced among younger investors. In particular, 35-to-44-year-old investors are more enthusiastic than the general population in their views that:

• AI will be a game changer (87% vs. 72%).

• It will help advisors better serve clients (89% vs. 74%).

• An advisor who uses AI will be desired (85% vs. 63%).

• AI will not replace the advisor/client relationship (84% vs. 82%).

“While AI is clearly groundbreaking and we are just scratching the surface of its potential impact within financial services, this data aligns with an insight we’ve known for some time: The clients who are most engaged with their financial advisors are also the most satisfied,” said Jeff McMillan, head of analytics, data and innovation for Morgan Stanley Wealth Management.

“Within this context, AI should be viewed not as a replacement of human guidance but as a powerful tool to help turbocharge a financial advisor’s practice management and client interaction capabilities.”

“Our goal is to arm our financial advisors with innovative technology that can help them be more efficient in their practices, giving them more time to do what they do best—serve their clients,” added Vince Lumia, head of field management for Morgan Stanley Wealth Management. “It’s encouraging to see excitement for artificial intelligence tools, not just within the financial advisor ranks but among investors as well.”

Improved information retrieval cited

When asked what possible implications AI might have for advisors, a Morgan Stanley spokesperson said that the company’s use case, AI @ Morgan Stanley Assistant, is a resource to efficiently source and retrieve internal information, and Morgan Stanley’s proprietary research and analysis in response to its advisors’ questions.

In addition, the spokesperson said that “a stream of interactions and feedback have helped us understand and refine how we can best leverage the technology we have deployed in getting advisors the insights they need, in the format they need, near instantaneously ... all to help more deeply enrich the relationships they have with their clients.”

And how can advisors use AI to better serve their clients? The Morgan Stanley spokesperson said that as noted above, in the third quarter of this year the company rolled out its AI @ Morgan Stanley Assistant.

This is an internal-facing service that leverages OpenAI technology and Morgan Stanley’s vast intellectual capital to deliver relevant content and insights into the hands of financial advisors in seconds, helping drive efficiency and scale. Advisors can use AI @ Morgan Stanley Assistant to synthesize and organize insights and knowledge, which will free up valuable time for them so that they can serve their clients better.

Advisor’s role is still critical

Another survey, this one by the CFP Board, backs up what the Morgan Stanley survey found — AI will not take the place of human guidance. The “CFP Board Consumer Sentiment Survey — Trust, but Verify,” found that only 1 in 3 investors (31%) feel comfortable implementing financial planning advice from a generative AI-powered tool without verifying it with another source.

Once financial planning advice from a generative AI tool has been verified by a financial planner, 52% of all investors are comfortable in acting on that advice. And when it comes to implementing that advice, investors of all ages are cautious. Only about 1 in 10 under the age of 45 (8%) say they would be very comfortable in implementing advice solely from a generative AI tool, while 15% of older investors concurred.

In addition, the survey noted that men are more optimistic about the potential impact new technologies will have on the financial planning profession in the near term. Nearly one-third of men surveyed (31%) describe themselves as “hopeful” about the impact AI could have on financial planning, compared with 19% of women. Additionally, women are more likely to describe themselves as “skeptical” (37%) than men (29%).

However, both men and women report feeling more comfortable with the financial advice received from generative AI than from other new sources and agree that verification with an advisor is key. Most men (57%) and women  (47%) say they would be at least “somewhat comfortable” in implementing financial advice from a generative AI tool such as ChatGPT or Bard if verified by an advisor.

Both men and women also believe that generative AI — as it develops and matures — could be a helpful tool for financial advisors. More than half of respondents (52%) believe that generative AI tools and social media will supplement financial planning advice from advisors in the next three to five years.