Artificial intelligence (AI) made a dramatic appearance in 2023. As often happens with hot topics, an initial flurry of attention on AI kicked off a cascade of articles, podcasts, interviews, and commentaries on how AI would transform society. This led to a frenzy of buying from investors hoping to cash in on the AI gravy train.

While AI is likely to have a significant impact on business, science, and society over the next few decades, we’ve been pondering how it will impact our industry—and the needs of our clients in the decades to come.

At first, it may seem easy to trust AI to make financial decisions for you. One of its primary strengths is that, once it is trained on a particular set of data, it can find patterns in that data. While seeking patterns in data is certainly an asset to a financial planner and wealth manager, there are many things AI does not appear to perform well, if at all, such as:

  • Making mental models.
  • Understanding emotions.
  • Being empathetic.
  • Understanding cause and effect.
  • Understanding context.
  • Performing tasks involving complex, unstructured data.

And these shortcomings for AI are at the core of successful financial planning. Consider the following situations that we have encountered with our clients:

  • Advising a couple where one spouse is experiencing dementia.
  • Creating a roadmap that would allow clients to retire at age 55.
  • Helping a client find a good CPA or estate planning attorney based on personal experience, not an algorithm.
  • Developing a plan for a client to spend time in two different cities during retirement.
  • Assisting a couple who want to provide as much support as they can for a child with disability without endangering any government support.

Fortunately, when it comes to working with people, most financial planners are skilled at:

  • Active listening.
  • Clarifying important goals.
  • Empathizing with clients about the challenges they face.
  • Making sense of messy financial situations.
  • Finding solutions for complex problems, often tangled up in emotional and logistical decision-making.

These are indispensable traits that financial planners use daily to help clients gain financial peace of mind and to achieve their financial goals. Who do you want on your side?

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