As wealth managers, we recognize that the opportunity to leverage AI deserves our earnest professional analysis. If there is one thing wealth management has in common with artificial intelligence (AI), it is that you should neither dismiss it, nor embrace it blindly. 

Despite its many potential advantages, AI’s adoption in wealth management still faces significant challenges. 

What is AI? 

When you think about it, we all use AI. When you ask your phone to look up “restaurants near me,” you’re using AI. It saves time and yields acceptable results. It could even surprise you by introducing a new restaurant you haven’t tried before. 

Whether you’ve used AI tools like Chat GPT yourself or not, you’re probably aware that the use of AI is expanding significantly. Need to write an important email? AI can help. Want anniversary gift ideas? AI will generate a list. 

So, one might think AI is a natural solution for saving time and achieving maximum results in wealth management as well. That’s a very good thought, but it’s not that simple. First, you have to ask, how good is AI really?

How good is AI? 

We’re told AI is continuously advancing, but currently, when you ask AI for help with that email, it’s not going to produce a perfect draft. You’ll need to read it carefully to check for errors and unintended meanings. It made the job easier, but the results are usually not 100% reliable. 

That’s ok, because you know how to write an email. You were just using AI as a tool to get you started, and you can adapt the results to fit your needs. 

However, when it comes to something as high stakes and complex as wealth management, would you trust AI? Is there a chance for error? Absolutely. Will you recognize something is off in the numbers? Possibly not. Is there a problem if the results don’t suit your intentions? You better believe it! 

How does AI work? 

To give you a basic understanding of how AI works, let’s just say it can gather data and run it through a complex algorithm in mere seconds to generate a result. 

This is why a common phrase used by AI experts is “garbage in, garbage out.” If you have the wrong prompt, or the wrong data, you won’t get the right result. 

Assuming you have a perfect algorithm for wealth management (which doesn’t exist yet), it’s still only as good as the data available to it. False and misleading data could lead to disastrous conclusions, and we know data can be faulty, whether it is manipulated intentionally or mismanaged to a point where serious errors occur. It takes critical thinking, vast knowledge, and practiced skills to evaluate financial data.

The emotional shortcomings of AI

While there is an argument to be made that AI offers a more efficient and data-driven approach to wealth management, investing is not just about numbers; it’s deeply personal and often emotional. Wealth managers do more than just manage money for their clients; they build relationships, offer reassurance during market downturns, and help navigate emotional life events the individual intricacies of investing. 

AI lacks the ability to understand and effectively respond to human emotions. It can analyze data and make recommendations, but it cannot provide the empathetic support and personal insights that many clients need, especially in times of financial stress or uncertainty. 

Clarity, Confidence, and Structure 

While we may use AI tools to help us in certain aspects of our jobs and daily lives, we think it’s important to share that there isn’t anything artificial about the way we care for families. Our dedication to your family’s future keeps us awake some nights, and that feeling is what motivates us to protect and grow your family’s most precious assets and legacy. 

Furthermore, a quality trusted advisor relationship can transform people’s lives and give them the financial confidence to enjoy what they have created. Delivering the highest level of service, a wealth management team provides families with Clarity, Confidence, and Structure. 

At the end of the day, we believe only an experienced and diverse team of financial advisors can truly earn the trust and confidence of clients to help them succeed and live their best lives. 

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Kurt Maurillo, CFP® is Managing Director of Clarity Wealth, a financial services practice that has built a heritage of managing the assets of affluent families for as many as four generations of wealth. The practice has offices in Naples and Fort Myers, Florida, and Pittsburgh, Pennsylvania. 

Wells Fargo Advisors Financial Network does not provide legal or tax advice. Be sure to consult your own tax advisor and investment professional before taking any action that may involve tax consequences. 

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Clarity Wealth is a separate entity from WFAFN.