Recent Microsoft research identified financial advice as one of the 40 occupations that generative AI is most capable of replacing. But, as reported in a recent WealthManagement.com piece, many financial advisors disagree, citing that AI can’t replicate the human connection.
So, who’s right? The answer is both.
Ask and you will receive. The core superpowers of AI are retrieval speed and pattern recognition, which pose a real threat to transactional advisors. Ask AI a question or give it information, and AI will converse with you. It will ask follow-up questions, respond to further directions to tailor a response and ultimately, AI will offer recommendations. In short, it will advise you in a way that fundamentally mimics the “discovery and prescribe” client engagement process many advisors use. A transactional experience that isn’t defined just by intent but by process. Tell me everything about you and I’ll make recommendations.
While AI lacks the human connection, consumers might instead see this as reducing the human connection risk that comes from engaging a financial advisor. Not all advisors have the client’s best interest in mind, and as an industry, we’re consistently ranked as one of the least trusted.
So yes, AI could replace a large swath of transactional advisors.
Context and Reason. It’s inherently human to simplify life into a repeatable mental map, which is evident in financial advice. Advisors often view clients through a framework that predefines meaning and speeds up analysis and recommendations. Yet life is inherently complex, highly personal, in constant flux and resistant to generalization. And this requires continuous attention to context and the ability to think (reason) through the ramifications of different actions in an inherently ever-shifting set of circumstances. This is particularly relevant in financial advice.
Yet, as recent Apple research, “The Illusion of Thinking,” found, AI is woefully inadequate at that task. AI does not “think.” We perceive lightning-fast retrieval and pattern recognition as reasoning, but they’re not. AI excels at connecting the dots, but it doesn’t understand the dots or the context in which they’re connected.
AI is an incredibly powerful tool, yet it does not replicate the contextual awareness or human reasoning that powers modern financial advice—the collaborative, co-creative process that equips clients to make highly informed and contextual decisions about their own financial future today and as they navigate forward.
So, in this case, AI will not replace modern financial advice.
A tale of two professions. One is a more transactional experience that retains many of the attributes of our industry’s legacy sales culture, and the other is modern financial advice, a collaborative advisor-client experience that goes beyond addressing what is known to the hidden and the unknown. A profession defined more by the depth of the engagement, not just breadth, that helps clients examine, reshape and expand their perspectives and frameworks in which they make decisions. Ultimately, enabling clients to make good decisions as they navigate through the uncertainty and flux of life.
So, no, it’s not hard to surmise that our legacy transactional profession will be replaced by AI, particularly as AI continues to make rapid leaps. Modern financial advice, while greatly aided by AI, will most likely never be replaced because AI does not replicate human thinking and reasoning.
Last word on AI. A note about the author. My academic and research background includes epistemology (the science of knowledge), amongst other decision sciences. Based on that, I have long believed that AI will never be able to replicate human reasoning. And the main reason is context.
AI agrees. In response to the question, “Will AI ever be able to think like humans?” ChatGPT responded, “Even if AI can mimic the outputs of human reasoning, it doesn’t have the same foundation. It lacks lived experience, embodiment, evolutionary biases, and contextual grounding that shape human thought.”
Even when artificial general intelligence emerges, it will have the same limitations: “AGI may mimic the appearance of contextual reasoning and human-like breadth, but it won’t share the underlying grounding that makes human reasoning what it is.”
AI is a revolutionary tool with immense capabilities that will help our entire industry excel; however, it just won’t replace modern financial advice—ever.
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