Young advisors welcome AI, but regulatory concerns restrict its use
Most young financial advisors say artificial intelligence will enable them do their jobs better, but they also say their firms restrict the use of the nascent technology, in part because of regulatory concerns, according to a study released Wednesday.
The majority of financial advisors polled — 64% — said generative AI would be a help to their practice, and 57% said it would be helpful to the investment advice sector, according to the 2024 Connected Wealth Report: AI & the Next-Gen Advisor. A little more than one in five — 21% — of respondents see AI as a threat to their careers and 31% perceive it as a threat to the advice sector. The average age of the responding advisors was 36.5 years.
“Financial advisors believe AI is a plus for themselves and the industry,” said a presentation about the report, which was sponsored by Advisor360, a wealth management software platform. “Most advisors expect AI to improve the front office and back office in some form.”
The results run counter to the usual apprehension that accompanies technological advances, said Darren Tedesco, president of Advisor360.
“The fact that advisors are ready to embrace AI as a complement to serving clients rather than a threat is really good news for the industry,” Tedesco said in an interview. “It will allow them to serve clients better. Think of it as a virtual digital assistant.”
The vast majority of advisors surveyed — 83% — said they have access to natural-language generation technology, but only 39% are using it. The biggest challenges to utilizing the technology are firm restrictions (31%), concerns about data security and privacy (27%), and compliance and regulatory issues (25%).
The hangups about using AI are related, Tedesco said, and revolve
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