Robots vs Humans: Will AI Replace Financial Advisors?

The future of artificial intelligence (AI) is uncertain and hotly debated. From stock market predictions to automated portfolio management, machine intelligence is being used to reshape the landscape of financial advice and portfolio management.

On one hand, AI can be used to automate mundane tasks, making them more efficient and cost-effective.

On the other hand, AI is still in its infancy and there is fear that it will replace human jobs. So, what does this mean for financial advisers? Will AI eventually replace them altogether?

The short answer is no. AI should be used to enhance human intelligence, not replace it, according to the Harvard Business Review.

AI may be able to automate some of the more mundane tasks associated with financial advising – like portfolio rebalancing and tax optimization—but this does not mean computerized bots will fully replace human financial advisers.

While AI is capable of performing many financial tasks more efficiently and accurately than its human counterparts, there are still certain limitations that prevent it from entirely replacing real-life advisors and portfolio managers.

The Many Advantages of AI

The benefits of AI in the financial advisory industry are clear, according to experts.

“One of the primary benefits of AI is its ability to quickly process large amounts of data and draw insightful conclusions,” said Chris Lean, Investment Director, Aisa International. “This can be incredibly useful for financial advisers, who often have to assess complex financial situations and make decisions quickly.”

AI can also help money managers make more informed decisions by analyzing historical data and drawing connections that humans may not be able to see.

Computers are able to analyze data quickly and accurately and can make decisions based on this data that would be too difficult for humans to process.

This can be particularly useful when it comes to making investment decisions, as AI can use data to identify opportunities in the market that may be missed by human advisors.

AI could also help advisers better manage their clients’ portfolios by suggesting strategies to maximize returns and minimize risk.

Streamlining Processes to Save Time

Another huge advantage of AI in financial advising is task automation, which streamlines tedious processes and reduces the need for repetitive work.

This automation is making financial advisors more efficient, and more connected with clients as well as freeing up their time so they can focus on more complex tasks.

Machine intelligence can automate administrative tasks like data entry, which frees up time for financial advisors to focus on building relationships with clients.

Programmed bots can also segment clients to further understand acquisition, growth, and retention goals, which can help identify proactive cross-selling opportunities.

Improves Customer Relationship Management

AI can provide frictionless, 24/7 customer interactions, which vastly improves the customer experience by offering 24/7 access to their accounts and financial advice services.

Machine intelligence can also help financial institutions better predict and assess loan risks, which can improve loan underwriting and reduce financial risk.

AI can also deliver personalized recommendations, which can help companies and individuals draw a practical road map that connects their current state to their future aspirations.

For example, AI-powered robo-advisors can guide customers on investment decisions based on their risk appetite, opening and closing prices, and the possibility of profit/loss.

AI can also make revenue projections, which is especially helpful for investors who are investing based on earnings announcements.

There’s Still Many Limitations to Overcome  

One huge drawback, however, is that AI depends on the quality of its input to provide quality answers.

If bad data is fed into the bot, it can produce misleading conclusions and give bad advice to the financial professional trying to understand a new market.

Another limitation is that AI may not be able to track real-time data necessary to make good investment decisions.

As AI is still in its infancy for this type of use and can provide inaccurate information, experts caution it shouldn’t be used alone to make investing decisions.

Additionally, AI services lack transparency in how they gather the information they provide, making it difficult for investors to know whether the advice is sound.

Difficulty Predicting the Future

While AI-powered algorithms can analyze past trends and make educated guesses about the future, they cannot accurately predict how the markets will move.

This is due in large part to the fact that computers are unable to take into account the unpredictable and often irrational behavior of human investors.

AI is also limited in its ability to consider the individual circumstances of an investor, such as their specific goals and risk tolerance.

Algorithms Can’t Make Decisions Based on Sentiment.

While machines can analyze market data and make recommendations based on past performance, they can’t factor in emotional factors such as fear or greed.

This is an important consideration when making investment decisions, as emotional factors can often have significant consequences on the outcome.

Most industry leaders agree that AI can’t provide the same level of personalized advice that human advisors and portfolio managers can.

AI algorithms are typically designed to provide generic advice, which may not be suitable for every individual’s needs.

Human advisors and portfolio managers are better able to tailor their advice to fit each individual’s specific goals and risk tolerance.

As such, it is unlikely that AI technology will ever be able to replicate the level of personal advice offered by a human financial adviser.

The Big Picture

While smart computers may change the nature of the work that human portfolio managers do, it’s unlikely that AI will replace human financial advisors entirely.

Financial advisers will continue to play a vital role in helping people manage their finances and plan for their futures.

By combining the strengths of AI and human financial advisors, clients can receive more personalized financial advice that takes into account their unique circumstances and goals.

Therefore, it is recommended to consult with a human financial advisor before making major decisions when managing an investment portfolio.

“While AI and related technologies have not replaced human financial advisors and are unlikely to ever completely do so, the technology will undoubtedly continue to provide numerous benefits to the financial advising industry in the future,” Lean added.


The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.


Chris Lean

Chris is a Chartered Financial Planner who writes blogs and articles to simplify and explain some of the financial issues that affect UK expats. Subjects include; hot topics, regulation and the ever-changing world of finance.

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