In less than two years, generative AI has gone from a parlor trick to a dependable helper for financial advisors that can amplify their marketing reach, client acquisition strategies and other initiatives. But not all advisors are diving in.
According to a Capital Group survey, 79% of advisors are using the most basic level of generative AI, but only 48% are using AI at a level that could make a difference to their business.
Brock Sutton, head of emerging client capabilities at Capital Group, along with Michael Kitces, founder of Kitces.com and an industry practice management guru, recently dissected current best practices for AI use in an onlne presentation for Capital Group’s Practice Lab, which creates advisor-centric content on practice management and client engagement.
“AI is just another technology tool in the toolbox that we get to use to be efficient as firms,” Kitces said. “We got calculators, then we got computers, then we got smartphones. And now we have this new tool in the toolbox of AI that does certain things in a very helpful way and is not so great in other things.”
Sutton demonstrated how a firm can methodically move up the AI ladder from simple brainstorming to market analysis and next-step recommendations, all falling within acceptable uses for fiduciaries as outlined this spring by the CFP Board’s AI ethics guide.
Using generative AI in this way can be very cost-effective, he said, as the deep research aspects of one provider, OpenAI’s ChatGPT, cost $20 a month for limited use and $200 a month for full use. The only other investment is an advisor’s time.
But increasingly, third parties are focusing the technology on specific aspects of an advisor’s business. For example, Cambridge, Mass.-based Datalign uses generative AI to match new clients to firms for lead generation, and Atlanta-based FINTRX uses it to match firms to potential acquisition targets.
“What you’re getting here are solutions that are easy to use, but typically they’re solving very specific problems,” Sutton said. “What we’re helping advisors with now is thinking of a systematic process for actually applying AI strategically to their business over the next three, six, nine, 12 months.
How AI Has Evolved To Help Advisors
Despite the ways that generative AI has evolved, most advisors — 79% — are stuck at the most basic, level-one form of AI, which is conversational, Sutton said. This was the AI the world was introduced to in November 2022 with the original ChatGPT. In terms of how useful that is to advisors, Sutton described it as an intern who has a Ph.D. across every discipline in human history.
“You ask them a question, and they respond immediately off the top of their head. They sound really intelligent, they use a lot of big words, but sometimes they get questions wrong,” he said. “You still have to shape them, give them feedback.”
At level two, which 48% of advisors are using, AI was augmented with the ability to reason, as was seen with OpenAI and its O-series large language models around September 2024.
“This is that same Ph.D. intern, but now you give them a problem, and as opposed to responding immediately off the top of their head, they actually take that problem, they think through it for a week, they break it down step by step, and then they come back to you with an answer,” Sutton said.
Level three, which is the furthest AI has gone on a commercial level and which came out earlier this year, is an AI agent that just 12% of advisors are using,
“That’s that same Ph.D. intern, but now they’re actually taking action without you there. So they’re actually doing something, executing on your behalf, and only coming back to you when they’ve done that,” Sutton said. “I sometimes have a hard time keeping up with this Ph.D. intern.”
When they get here, level four AI would be able to aid in innovation and level five would be able to take over most of the work within an organization, he said.
AI Use For Better Client Outreach
Looking at the adoption rates, Sutton said he can see that it’s hard for advisors to zero in on what’s really important in AI for their businesses today.
“And I think this is a pain point for a lot of folks. I think people think of AI as this kind of amorphous black box,” he said.
To help the advisor community get the most out of what’s available in AI, Sutton and his team at Capital Group created a tutorial in the firm’s Practice Lab that takes an advisor through effective prompting when asking for help with research or content creation and then through a step-by-step process that yields real results.
The tutorial uses both conversational AI, which is best for brainstorming, ideation, content creation and summarization, and reasoning AI, which can easily handle data analysis, decision-making and complex scenarios, Sutton said.
Using ChatGPT, Sutton set the scenario: a Chicago-area firm that’s a three-person team servicing high-net-worth individuals with a focus on retirement and comprehensive financial planning. The objective is finding new sources of organic growth, for which the firm needs a niche market deep dive.
Within an hour, this exercise has yielded a 15- to 20-page report on underserved niche markets; a brand positioning statement and unique value proposition for those markets; and customized marketing materials, including blog posts, social media, webinars and events.
“We first used it as a research analyst to research who we should target. Then we used it as a creative agency to create the value prop. Then we used it as a content director to come up with that content calendar. Then we used it as a writer and visual designer. And finally, as a digital marketing analyst to actually analyze the campaign and give us a recommendation,” Sutton said. “So a fairly holistic soup-to-nuts use case.”
Kitces said he uses ChatGPT in this way for his team as well, asking for three angles on a topic that might be interesting to a specific target audience. Picking one of the three that’s proposed, Kitces then asks for five headlines that might be engaging for that audience.
“It’s usually not perfect. But when we ask for three or five at a time, we almost always find one that’s effective or one or two that we can blend together,” he said. “So I might still know my audience better than the AI, but it’s so good at filling a blank page.”
To bring this exercise from the tutorial to a real-life firm, Sutton recommended that advisors block out one hour a week and try to accomplish two tasks using AI in that hour.
“Give yourself the space to play around with this technology to figure out how you get the most out of it,” he said.
And if poor prompting is holding an advisor back, Sutton said they should ask the chatbot about that, too.
“You can actually ask AI, ‘What questions haven’t I asked? How can I make these questions better and more sophisticated for my target market?'” he said. “Things like that that actually help refine your prompting.”
The Future
As AI continues to evolve and take over aspects of running a firm, Sutton and Kitces agreed that no matter how good the technology gets, it’s not going to take over an advisor’s job.
“It will probably take a portion of your job,” Sutton said. “So if you think of jobs as a collection of tasks that you do, some portion of that may be commoditized by AI.”
Kitces said that as technology marches forward it always starts with taking away the simplest task, automating them, and giving that time back to the advisor.
“That’s what enables us to do more for our clients now than we did 20 years ago. But it doesn’t necessarily change the core value proposition of what we do as financial advisors and why we get hired,” he said.
“To listen to the predictions going back to the 2000s, we were supposed to be destroyed 20 times over by now, and we’re still here.”
