Why Human Financial Advisers Still Matter in the Age of GenAI

Don't Be Fooled by GenAI Financial Advisers

The wealth management industry is shifting focus to engage its newest audience: Gen Z. Instead of relying solely on seasoned professionals, companies are introducing generative AI-powered digital assistants. These AI advisers even use slang to connect with younger investors, aiming to appear relatable and current.

This change marks a cultural shift in financial services, building on previous disruptions like robo-advisers and the rise of social media "finfluencers." Traditionalists may scoff, worried that human advisers might soon be replaced by digital ones. While AI will become a key feature in financial advising, the timing and approach matter.

Humans Still Hold the Advantage

Financial advice is more than crunching numbers; it involves empathy, accountability coaching, and education. Human advisers excel at calming panicked clients during market turbulence and asking the right questions to uncover underlying goals. For example, they can challenge overly cautious requests from young investors that might limit growth potential.

Access to such personalized service, however, remains costly. Advisers typically charge via assets under management (AUM)—a percentage of the portfolio—or a flat fee for comprehensive plans, which can run into thousands of dollars. Moreover, many require minimum investable assets, often between $500,000 and $1 million, limiting entry for younger or less affluent investors.

Lowering Barriers with Robo-Advisers

Fifteen years ago, these cost and asset barriers pushed millennials toward robo-advisers like Betterment and Wealthfront. These platforms offered low fees and no minimums, shaking up the industry and raising questions about AI replacing humans.

Over time, it became clear that a hybrid model works best. Millennials desired some human interaction, prompting robo-advisers to introduce options for access to real advisers. This forced traditional advisers to diversify services and expand their reach to less affluent clients.

It's important to distinguish between robo-advisers and generative AI advisers. Robo-advisers rely on mathematical models and algorithms, while generative AI uses language models to simulate human conversation, often making it more appealing to Gen Z. This younger generation is comfortable seeking quick, free financial guidance from online sources.

Technology Is Still Fallible

A recent survey found that 77% of teens and people in their 20s turn to online platforms and social media for financial questions. While generative AI offers 24/7 accessibility and engaging interaction, it is prone to errors known as “hallucinations,” where the AI may provide inaccurate or misleading information.

Companies like Arta Finance are pioneering AI financial advisers combined with real human support, currently serving accredited investors but planning broader availability. These AI agents can interact via voice or text and use generational slang to connect with users.

Risks Without Human Support

Robinhood’s upcoming launch of Robinhood Cortex, an AI-powered research assistant, highlights a potential pitfall. Unlike Arta, Robinhood currently offers only a support team for administrative issues, lacking real financial professionals to guide customers.

This absence can lead to risky situations for novice investors who might access complex products like options trading without adequate advice. Robinhood’s past regulatory fines underscore the dangers of insufficient oversight and support.

The Balanced Path Forward

AI will undoubtedly play a larger role in financial advice. But human advisers must focus on their unique strengths—soft skills, emotional intelligence, and personalized guidance. Rushing to replace people entirely with AI could harm investors, especially those new to the market.

For finance professionals, the future means integrating AI tools thoughtfully while maintaining the trusted human connection clients value. Those who adapt by enhancing their soft skills alongside technology will be best positioned to serve the next generation of investors.

For finance experts interested in building skills with AI tools, exploring specialized courses can provide practical knowledge to stay ahead. Check out AI tools for finance to learn more about integrating AI effectively in your work.