As more financial advisors adopt the use of artificial intelligence, the technology will help them avoid spending their time answering mundane questions and focus more on asset allocation or financial planning.
The fear that artificial intelligence will replace financial advisors like other jobs is common, but the intent of the technology is to give investors more tools and sophisticated information immediately. Instead of waiting or relying on their advisor to answer questions such as how the fees of an ETF compare to those of a mutual fund over the next ten years or how increasing the monthly contribution to an IRA by $100 affects their returns, clients can receive answers from artificial intelligence and rely on their advisors for more nuanced deep-dives.
As artificial intelligence matures through its various disciplines such as machine learning, image and text classification, natural language processing or speech recognition, the technology is designed to conduct very routine and specific tasks and able to replace some jobs held by humans.
The technology is programmed to mimic human conversation based on "its programming and mining tons of data to figure out what the best answer may be," said Grant Easterbrook, co-founder of Dream Forward 401(k), a New York-based low-cost 401(k) plan provider.
The current, traditional operations that many larger financial services firms employ when a client has a question tend to be frustrating, since the turnaround time can be very long. Often when an investor calls, he is told that only a specialist can address his query and receiving a reply can take days and require the individual sending in more documents by fax or mail, Easterbrook said.