AI technology unlikely to fully replace financial advisors: Morningstar

the beginning of Generative Artificial Intelligence (AI) Technology could have a big impact on the wealth management industry, but the role of human financial advisors is unlikely to be automated, according to one major financial services firm.

AI has the ability to quickly provide financial insights by scanning the vast internet, and investment firms have been offering robo-advisors to their clients for years, but the combination does not eliminate risk. Role of Financial Advisors. A recent article by Morningstar’s Danny Noonan suggests that “AI will change the game, but it is unlikely to replace financial advisors. Rather, AI will likely help them improve their productivity and provide better advice for complex customer scenarios.”

“Our thinking on this is that while many advisor roles will probably not be fully automated, there will definitely be some mix shift in the responsibilities and types of tasks financial advisors perform and how they do it,” Lee Davidson, Morningstar’s chief analytics officer who oversees the company’s analytics and AI efforts, told Fox Business.

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AI is unlikely to replace human advisors, according to Morningstar, although artificial intelligence is helping financial advisors study their clients’ investments and develop strategies. (istock / iStock)

“In the world of 2030, I think the vast majority of wealth management clients expect a data-driven, hyper-personalized advice delivery ecosystem, but they still need human connections and human interfaces because we are dealing with people’s livelihoods, be it eggs in the nest or college funds for their children,” Davidson explained. “In that context, the role of financial advisors will emerge, but some of the work they do today will likely be further enhanced with AI.”

Davidson said the introduction of AI technology to the financial services industry is likely to improve advisor productivity in the sense that they are more informed. Wealth management clients Allows you to manage more assets per advisor.

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Morningstar Financial Services

Morningstar launched an investment research assistant powered by its own generative AI called “Mo” this spring. (Getty Images)

While AI may eliminate some of the day-to-day interaction advisors have with clients when chatbots serve as a way for investors to answer simple questions, it will allow advisors to have deeper conversations with clients more often, either in person or via Zoom, he added.

In particular, Davidson said the “holistic financial planning” that financial advisors and CFAs help clients with is unlikely to change despite the rise of AI. He said topics such as “real estate planning, tax management, wealth forecasting, multi-account portfolio optimization, and tax deferred accounts” will be “areas where humans will continue to be deeply involved, using the same types of services they do today.”

As ordinary investors become more proficient with AI tools and Large Language Models (LLMs), we believe we may eventually see AI tools acting as end-to-end financial advisory tools. But Davidson said that is likely to be constrained by regulation, and investment recommendations will continue to be with human advisors, even as they are increasingly informed using AI tools.

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AI tools help investors and financial advisors alike investigate potential investments and other strategies. (image/image)

“In most cases, firms will want their advisors to continue to kind of ‘hold the trigger’ when it comes to portfolio management,” he said. “And much of it is regulatory, or constraining, in nature, so even if companies are happy with the technology, it will be hindered for some time.”

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This spring, Morningstar released a beta version of its own generative AI chatbot called “Mo” on several of its platforms, which serves as a research tool for investors and advisors.

Powered by the Morningstar Intelligence Engine, an investment research library that works with Microsoft’s Azure OpenAI service, Mo is designed to assist both investors and advisors with conversational summaries of Morningstar’s independent research. Microsoft and OpenAI Developer of ChatGPT.


“In our field, we provide investment research, a lot of information for advisors and other consumers to understand and learn about securities,” Davidson said. “Even in such circumstances, we do not wish to provide a pathway for LLM to provide its findings and publish them to clients at this time without at least some degree of oversight by qualified analysts to research and approve them prior to publication.”

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