Financial advice and technology have grown alongside each other – as technology has evolved and expanded, so too have advisory firm services. And as trading, portfolio rebalancing, and financial plan construction have become more efficient, advisors have increasingly focused on holistic advice, financial psychology, and behavioral coaching to complement their technical expertise. Now, with theRead More... The post Find Your ‘Cyborg Advisor’ Sweet Spot: Blend AI Into Your Firm By Understanding How Clients Make Financial Decisions first appeared on Kitces.com.
Financial advice and technology have grown alongside each other – as technology has evolved and expanded, so too have advisory firm services. And as trading, portfolio rebalancing, and financial plan construction have become more efficient, advisors have increasingly focused on holistic advice, financial psychology, and behavioral coaching to complement their technical expertise. Now, with the rapid growth of AI across the financial services industry, questions about whether technology might one day replace human advisors are taking on renewed importance.
In this article, Derek Tharp, Lead Researcher at Kitces.com and Associate Professor of Finance at the University of Southern Maine, explores how advisors can use AI as a tool to augment – not replace – their advice and client relationships. While AI excels at tasks like prediction and computation, it struggles to understand human values, especially since people often don't have a clear or consistent understanding of their own. A client's reluctance to invest in equities or delay Social Security, for instance, may stem from deep-seated beliefs, personal preferences, or a mix of both. And as advisors know, financial advice often goes beyond identifying the 'correct' or 'most optimal' answer – it's also about connection, reassurance, and helping clients uncover their true priorities. While AI can mimic language patterns and simulate empathy, it lacks the lived human perspective necessary for genuine emotional resonance – which can limit the trust clients are willing to place in it, especially when navigating sensitive or complex life decisions.
That said, AI brings real strengths – particularly in data analysis, operational consistency, and computational efficiency. Tools powered by Large Language Models (LLMs) can summarize meeting notes, automate routine communications, and eventually synthesize insights across disparate systems. Advisors adopting these tools will need to ensure that the AI's output is current and that the technology integrates well with their workflows. But when used thoughtfully, AI can help advisors be more present, especially in client meetings!
This emerging hybrid model of the 'cyborg advisor' blends the technical precision of machines with the emotional intelligence and nuanced judgment of human professionals. Looking ahead, AI integration may center around CRMs, financial planning software, document management systems, or middleware AI assistants. Each approach has advantages and tradeoffs. Financial planning software may be particularly well-positioned to become the central hub, with its ability to generate accurate projections and precisely modeled planning scenarios. But CRMs, with their centralized data and integration potential, also have a strong case – especially if they expand their planning functionality. Whatever the tool, these systems can help advisors work smarter, provide more value to clients, and enhance the planning process – all without compromising the integrity of human judgment.
Ultimately, financial planning is rooted in trust, empathy, and the ability to navigate personal values – with a foundation of technical knowledge. As advice continues to evolve, advisors can combine their human strengths with the efficiency of AI to create better client outcomes. Those who embrace this hybrid approach – using AI to enhance, rather than replace, their capabilities – will be well-positioned to thrive in the changing landscape of financial advice!
