Financial professionals and AI: Is ChatGPT a friend or foe?

Artificial intelligence (AI) seems to be exploding and taking over the world, but will it take over your role as a financial professional? The truth is, technologies like ChatGPT and other AI platforms aren’t new; they’re just getting much better, much faster.

Whether you like it or not, AI is here to stay. Those who work in the financial industry will need to come to grips with these advancing technologies and learn how to leverage them to their advantage (and to the advantage of their clients).

AI’s disruption in the financial industry

Some financial professionals may be concerned about AI’s potential to disrupt the financial industry, their services and livelihoods. The truth is, AI already has. 

Financial professionals are accustomed to using technology to help them make decisions, and most already leverage AI in the form of predictive analytics and algorithms. Adopting automation technologies has been a differentiator for many, helping financial professionals and their clients make informed financial decisions. 

But some financial professionals admit that this new generation of AI feels different and maybe somewhat scary. That’s because some AI platforms have an astonishing ability to generate human-like interactions, information and content at lightning speeds. 

When considering AI’s capabilities and its implications for financial professionals, it’s important to put things in perspective and consider the pros and cons.

Potential benefits of AI for financial professionals

There are, no doubt, aspects of every financial professional’s daily tasks that have been streamlined and improved because of automation, and few want to return to the days of elaborate Excel spreadsheets and piles of paper containing disparate data. Like technology innovations of the past, AI has the potential to revolutionize the financial industry and improve financial professional and client experiences

Machine learning algorithms may be able to provide customized investment recommendations based on a client’s goals and current financial status. AI also may offer efficiencies for manual tasks and repetitive processes, or assist with email responses or chat functions. It’s a matter of whether financial professionals are willing to leverage these advances and apply them to their daily routines. 

Potential AI precautions & pitfalls

AI does an incredible job of generating information, but the potential flaws of AI present major challenges associated with risk and compliance. A problem is that some of that information may be misleading or outright false. Some even question whether it is fair and unbiased. 

While financial professionals can’t necessarily dismiss AI-generated insights, they can’t wholeheartedly embrace them either. As capable as AI is, humans need to discern its output. For financial professionals, that still requires in-depth industry knowledge, human reasoning and an understanding of each client’s individual needs, wants and risk tolerances. 

This last point can’t be overstated; part of a financial professional's role is to explore and factor in a client’s emotional and behavioral characteristics in addition to their finances. For example, does AI know that your client tends to panic when markets drop and needs to be talked down from their compulsions to run? Can AI delve into a client’s underlying values and know that their biggest motivation for financial security is caring for an aging parent? What about navigating the perplexing emotions of job loss, divorce, health problems, the death of a loved one or gaining an inheritance? 

All these situations and milestones can bring with them a lot of emotional turmoil and financial implications that need to be sensitively addressed…by a human. The bottom line is that financial professionals do much more than manage investments; they help manage emotions. That’s something that only happens in authentic human relationships and can’t be duplicated by artificial intelligence.

Yes, AI, ChatGPT and other technologies will continue to impact the financial industry. But your role as a financial professional likely isn’t going anywhere; it’s just going to evolve, as it has for generations.

Need help navigating through your clients’ complex emotions and understanding the impact on their financial outlooks? Access our Behavioral Finance Advice resources, and contact our team with questions.

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