Is AI coming for wealth managers' jobs? Not yet, research shows

As artificial intelligence grows more sophisticated, many Americans fear the technology will someday take their jobs. Financial advisors, however, may not need to worry — at least not yet.

That's the impression left by a new study from Charles Schwab, the Texas-based financial services giant. The results paint a mixed picture: After surveying 1,000 401(k) participants across the country, Schwab found that almost half — 49% — of workers felt comfortable getting financial advice from an AI bot. 

On the other hand, very few workers actually did so. However comfortable they felt about it, only 4% of respondents actually adopted the advice of a bot.Instead, clients clearly preferred the human touch. While 74% of workers said they were likely to accept computer-generated advice, almost all of them — 95% — said they would follow advice from a human professional.

"Schwab and many of the advisors we serve are exploring the potential benefits that generative AI can deliver and are seeing some of the benefits it can provide," a Schwab spokesperson said in an email. "We firmly believe GAI will not replace the role of humans in wealth management or the deep, personal relationships advisors can offer clients."

This preference has also shown up in other studies. Yahoo Finance and the market research company Ipsos, for example, found that only 20% of investors were likely to use an AI financial advisor, while 63% did not trust them. The top concern of these respondents was the lack of a "human" element in the advice.

The bots polled a little better on the personal finance website Annuity.org, which found that 29% of Americans trusted AI for investment advice. But when asked in more detail, their confidence plunged — only 9% would prefer a bot's advice over a human's for managing portfolio risk, and just 12% said the same for building their long-term wealth or providing stock tips.

So should financial advisors feel threatened?

"Not yet," said Mark Wilson, a certified financial planner and the founder of Mile Wealth in Irvine, California. "None of my clients have mentioned these tools to me."

Many wealth managers feel that the "human" element of their work is not just an advantage, but central to what they do.

"AI will not replace financial advisors, because I don't think it will ever be able to fully understand human emotions, and that is absolutely mandatory for a great advisor," said Paul Monax, founder of Agile Wealth in Littleton, Colorado. "It is our job to understand where a person is, where they want to go, why it is important for them to get there and then — and only then — help them to build a bridge to get there … It's those middle parts of human connection that I am skeptical will ever be replicated by AI"

Read more: ChatGPT: Miracle, meme or menace?

Others feel not only that human advice is superior, but that AI still has some significant kinks to work out.

"I think most of the people who are worrying about ChatGPT haven't used it very much," said Landon Tan, founder of Query Capital in Brooklyn, New York. "It's like asking questions to a really confident person who is completely making it up half the time. … In terms of accuracy, I would put it several steps down from Googling."

On the other hand, the technology may have other roles to play in advisors' practices, short of outright replacing them. Some wealth managers have used AI to streamline their hiring processes, while others have found it useful for portfolio management. And many have used it to battle writer's block.

"In its current form, AI is great at … helping to brainstorm written content, providing a templated starting point for common client questions, and so on," said Kevin Brady, a vice president at Wealthspire Advisors in New York City.

Monax said lately he's been "experimenting" with using a bot to write work-related content. He still has to review the text and edit it at the end to make sure it "comes across as me," but he still finds it helpful.

"It does give me a starting point instead of a blank page," Monax said.

Read more: Why superhuman financial advisors will survive the AI era

Clients, however, may have less experience with the technology than their advisors — at least for now. Schwab's study found that only 18% of U.S. workers had used ChatGPT, while 52% had heard of it but never used it. Another 30% had simply never heard of it.

So if AI really is coming for wealth managers' jobs, it's off to a slow start.

"We're a long way off from technology being able to replace humans, because humans have more direct experience with human needs," Tan said. "In the real world, common sense goes a long way."