Editor’s note: The Horsesmouth AI-Powered Financial Advisor program offers four live two-hour sessions that explore the opportunities artificial intelligence offers and practical ways to start putting AI to work in your practice. The sessions begin October 24. Enroll here.
As artificial intelligence begins to reshape industries, financial advisors face a choice: adapt or risk missing out on one of the biggest technology shifts to ever hit the office.
A recent Horsesmouth survey revealed that only 12% of advisors are using AI tools daily, while 35% haven’t even dipped their toes in the water. Horsesmouth Editor-in-Chief Sean Bailey sees echoes of the 1990s Internet boom–and the opportunities that accompany disruption.
Sean, who has developed and teaches the AI-Powered Financial Advisor training program, talked about how advisors can begin to incorporate AI in their practices during a recent Horsesmouth Live presentation. The full presentation and a summary of the discussion are below.
Key takeaways from the talk
- Only 12% of financial advisors are currently using AI tools daily, indicating a significant opportunity for early adopters.
- AI in financial advisory is not about replacing human expertise, but rather acting as a “co-intelligence” to amplify advisors’ capabilities.
- The concept of “Action Quotient” (AQ) suggests AI can make advisors both smarter and more efficient in completing tasks.
- AI can assist with various aspects of an advisor’s practice, including client meeting preparation, marketing efforts and explaining complex financial concepts.
- There’s a learning curve associated with AI adoption, with experts suggesting it takes about 10 hours of focused work to fully understand its potential.
- Effective use of AI requires understanding “prompting”—how to communicate effectively with AI models to get the best results. It’s not the same as “Google searching.”
- Compliance and privacy concerns can be addressed by avoiding sharing identifiable client information with AI tools and using enterprise-level AI services for enhanced security.
- The AI revolution in financial services is compared to the Internet revolution of the mid-1990s in terms of its potential impact on the industry.
- Advisors who fail to adapt to AI technologies may find themselves at a significant competitive disadvantage in the future.
Charting the AI future of advisory services
Informed by more than 2,000 hours of hands-on experience using AI models, Sean is working to help advisors harness AI in their work.
“Imagine having the world’s most knowledgeable executive assistant at your beck and call, 24/7,” Sean says, describing one way to think about how advisors may use AI in their work.
Sean: “The AI revolution refers to the unbelievable powers that are baked into a class of new AI models that are available to financial advisors. Many of you have heard of ChatGPT, some of you have heard of Google’s Gemini. I happen to be a big user of Anthropic’s Claude. These are large language models that, based on some amazing breakthroughs that happened in 2017, can do things for us. They’re able to answer our questions and have deep conversations, but they’re also able to do amazing things for us amazingly fast, with great accuracy and higher quality.”
The power of co-intelligence
Sean is quick to dispel the notion that AI is here to replace human advisors. Instead, he suggests the concept of “co-intelligence,” where AI acts as a powerful assistant, enhancing an advisor’s capabilities and efficiency.
This partnership between human and machine intelligence boosts what Sean calls the advisor’s “Action Quotient” or AQ, the ability to get things done.
Sean: “Initially when I said I’ve been more than two years now into using these models, I actually started with an early version of ChatGPT from a company called Copy AI in 2021. I didn’t know anything about prompting, and no one was calling it ChatGPT. No one was calling it large language models, but this company had licensed the technology from OpenAI and it was able to put it together. And so, I started to say, ‘Wow, this is interesting. They claim it can write marketing copy faster.’ And so, I started playing around with it. And since then, the models have just gotten much more powerful.”
This evolution has led to AI systems capable of assisting with a wide range of tasks, from drafting emails and creating marketing content to helping advisors prepare for complex client meetings.
Practical applications in advisory practices
The potential applications of AI in financial advisory are many. From streamlining client meeting preparations to enhancing marketing efforts, AI can touch nearly every aspect of an advisor’s practice.
Sean said that after rolling out the AI-Powered Financial Advisor program in July, he found one way that advisors were able to use AI quickly.
“One big thing that resonated right off the bat was the ability to totally change how you’re thinking about your client meetings,” Sean says. He described a scenario where an advisor is preparing for a complex client situation—a couple with an adult autistic son, looking to set up trusts for his long-term care.
“In essence, we now have the power to leverage the enormous abilities of these computers in ways only computer programmers could in the past.”
“It’s a very complicated issue, emotionally complicated, legally complicated, technically complicated from a financial planning perspective,” he says.
Ahead of a meeting, advisors can use AI to engage in a brainstorming session. The AI doesn’t just assist with brainstorming; it helps create a structured, custom meeting agenda, with key points and time allocations, and even suggesting questions to explore with the client.
Sean: “You can really game out some of the key issues you’ll want to be discussing. And then not just broadly brainstorming, but then turning that brainstorm into a draft agenda for the meeting with key elements organized and timestamps next to them so that the advisor knows when it’s time to move on if necessary to the next topic.”
During the session, advisors were impressed. “People in the class started doing that right away and came back saying, ‘Wow, this is just amazing.’”
Sean shares another example from one of his training sessions:
“We had an advisor in our first class who had a long-term client coming in the next day, and he had sold an apartment building, so he had a lot of liquidity, but he was also very conservative. And this advisor had a conversation with ChatGPT about this particular type of client and very specifically also about, ‘OK, what are the range of possible things that we could do with this money that’s coming from the sale of this apartment complex?’ And the advisor was blown away by the level of detail and nuance that was delivered.”
This scenario illustrates how AI can help advisors quickly generate and analyze multiple strategies for complex client situations, providing a depth of analysis that might take hours to produce manually.
AI can also assist in drafting follow-up emails, and even explaining complex financial concepts to clients more effectively.
For marketing, AI can help craft personalized content and custom educational materials, saving advisors significant time and effort. It can analyze client data to suggest targeted marketing strategies or even help draft personalized newsletters and social media posts.
Navigating the learning curve
While the benefits are clear, there’s a learning curve associated with AI adoption. Sean suggests it takes about 10 hours of focused work with AI tools to truly understand their potential. However, with guided instruction and practical use cases, advisors can start seeing benefits almost immediately.
A key insight is understanding that AI is not a search engine.
Sean: “You need to understand how to talk to these models, how to communicate with them. And that’s this thing that’s called “prompting.” Basically, it’s how we use our natural language. This is what’s amazing. This is called ‘no-code coding.’ In essence, we now have the power to leverage the enormous abilities of these computers in ways only computer programmers could in the past.”
This concept of “prompting” is crucial. It involves providing the AI with context, clear instructions, and sometimes even a bit of role-playing. For instance, you might ask the AI to “act as a seasoned financial advisor experienced in complex estate planning issues” before posing a complex question about estate planning, Sean says. This approach helps the AI understand the context for it to generate a useful response.
Addressing compliance and privacy concerns
For many advisors, compliance and privacy concerns are significant concerns. Sean advises a common-sense approach. Don’t share with AI tools a client’s personal identifiable information. Treat AI tools with the same level of caution as you would any other external resource. Instead of specific client names or identifiable information, use general descriptions when seeking AI assistance.
For those requiring additional safeguards, Sean points out that enterprise-level AI services offer enhanced data privacy and security features. These solutions can provide an extra layer of protection for firms handling sensitive financial information. They only cost a small amount more per month.
Risks of falling behind
As AI continues to reshape the landscape, the risks of not adopting these technologies become increasingly apparent.
Sean: “I was lucky enough to have had a significant career in the newspaper business as a journalist leading up to 1995 when you may recall Windows 95 came out. Netscape had just come out as well. People were starting to move away from CompuServe and AOL, or they were getting the ability on those platforms to go out onto this thing called the Worldwide Web. And so, as a journalist in the print world, I was amazed by it.…But there were people in the newspaper business who were totally dismissive, highly skeptical, and consequently, unfortunately, they were left unprepared, and it totally eviscerated the daily newspaper industry. And so, I feel like we’re in a similar time in terms of this is that big.”
Advisors who fail to adapt to AI technologies may find themselves at a significant competitive disadvantage in the future, unable to match the efficiency and depth of service offered by their AI-enhanced peers, Sean says.
The future of AI in financial advisory
The future of AI in financial advisory is intriguing, with developments like voice, video, and smartphone interactions starting to happen. As these features continue to evolve, they promise to further enhance the advisors’ abilities to generate significant time savings and boost advisor-client interactions.
Sean sees a future where AI becomes an integral part of all advisor’s daily workflow.
Sean: “Soon smartphones are going to have these small language models that run in the background and even when they are not connected to the Internet.”
This could mean having AI assistants who can analyze market trends in real-time, provide instant answers to client queries, or even attend client meetings as virtual note-takers, providing instant summaries and action items.
Getting started with AI
For advisors looking to get started with AI, Sean recommends treating it as a learning journey that should be enjoyable. “Yeah, it’s a lot of fun too. We have a good time.”
He suggests starting small, perhaps by using AI to help draft client emails or prepare for meetings. As comfort and proficiency grow, advisors can gradually incorporate AI into more aspects of their practice.
To help advisors on the journey to establish a working relationship with AI, Sean has developed a four-week AI-Powered Financial Advisor program. Advisors meet with him for two hours in each of the four sessions.
The course covers the basics of AI and prompting to specific applications in marketing and client engagement.
The AI revolution in financial advisory is already here, Sean says. By embracing these powerful tools responsibly and strategically, advisors can enhance their practices, deepen client relationships, and position themselves at the forefront of their industry.