Unless you’ve been living under a rock for the past year, you’ve heard people talking about generative AI tools, like chatGPT. People in the business world have been speculating which industries and jobs will be most disrupted by it, with the theories ranging wildly depending on who you ask. As someone who is currently pursuing a financial planning designation, my mind naturally drifts to that industry. Can AI do the job better? Is there a role for humans in the future? I believe there is, and here’s why.

Complexity of Human Needs

Financial planning involves understanding and interpreting complex and nuanced human needs, goals, and emotions. AI can do a lot of things better than humans, but empathy isn’t one of them. Empathy is literally about feeling what another person is feeling, and AI is completely incapable of it.

Think about your own experience with your finances. You’ve likely experienced emotions related to money: fear, worry, or maybe elation, as you watch your investments go up along with markets. At the end of the day, financial planning is about more than just dollars and cents; it’s about deeply understanding the goals, dreams, fear and worries of your client… and these are things a human is far better-equipped to handle than AI.

Trust and Relationship Building

When it comes to dealing with your life savings, trust is extremely important. Most people would feel uncomfortable taking holistic advice from an AI tool without vetting it by a trusted human first. Over time, a human financial planner gets to know you, your family, your wants, needs, goals and dreams. Not only is it often more pleasant to deal with a human, but as they get to know you, their ability to support you in the way that is most beneficial to you improves as well.

Can AI improve the way it supports you? Absolutely. But will you ever fully trust its recommendations on what to do with your life savings? I can’t answer that, but it seems unlikely for most people.

Regulatory and Ethical Considerations

Financial planning is a heavily regulated industry. AI systems must comply with these regulations, which can be complex and vary by region. While there may come a day when AI is capable of navigating these complexities across regions, that day feels relatively far out, even with the current rapid pace of advancement. Humans are currently better equipped to navigate these nuances and make judgment calls that AI might not handle appropriately.

Customization and Adaptability

While AI can offer personalized recommendations based on data, human financial advisors can adapt their strategies based on real-time conversations and deeper insights into their clients’ lives. They can provide a level of customization and adaptability that AI currently cannot match.

Financial planning also sometimes requires creative problem-solving and critical thinking to address unique situations. We humans are really good at these tasks, while AI tends to be more rigid, sticking to predefined algorithms and data sets.

Implementing Financial Planning Recommendations

Part of a financial planner’s job is to help with the implementation of their recommendations. In other words, it’s about making you as the client feel like you don’t have to go it alone.

Remember what I said earlier about regulation? In order for AI to effectively be able to implement its suggestions, a lot would need to change from an infrastructure and regulatory standpoint. It’s not enough for AI to be technically capable of, say, applying for a line of credit on your behalf. The ability for AI to do that would need to be something lenders and regulators could support… and that feels unlikely in the short to medium term.

For those who are totally comfortable doing all of the legwork to implement a financial plan, sure, AI can probably do the job well enough. But they’re the minority. For the rest of us? Knowing you have a real human being in your corner to help you navigate the complexities of bringing your financial plan to life is, and will continue to be, a massive benefit that AI just isn’t equipped to replicate.

Now, it probably looks at this point like I’m letting my bias get the better of me a bit here. I’m completing my designation, so of course I have a vested interest in believing that my industry will be safe from AI, right?

Well, not so fast.

I’m actually a big fan of generative AI. I think it has the potential to aid us with all sorts of tasks across industries. Even within the financial planning industry, I see AI playing a role in the near future. Here are a couple things it should be able to do for planners.

Shortening Data Analysis

One thing that AI is very obviously better at than humans is data processing. AI can process vast amounts of data quickly, and identify patterns that might not be immediately apparent to human advisors. Synthesizing all of the data we as financial planners collect is one of the most time-consuming steps of the planning process, and AI can cut down on that significantly. Not only does this make our jobs easier and free us up to focus more on the human side of financial planning, but it can also help in making more informed decisions.

Predictive Analytics

Beyond analyzing historical, actualized data, AI also has the ability to use that data to look to the future, and predict what’s likely to happen. It can help to forecast market trends and identify potential risks, which financial planners can use to better serve their clients. There may even come a time when AI is able to use behavioural patterns that emerge in data to predict the potential barriers a client may face in sticking to a plan presented to them. Now THAT would be cool.

Wrapping it Up

While I believe AI will play a significant role in augmenting and enhancing the capabilities of human financial planners, I don’t think it will fully replace them, due to the inherently human elements involved in financial planning. It’s not just about dollars and cents, it’s about hopes and dreams… something AI just isn’t equipped to understand on a deep level.