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Education | Apr 09, 2024

AI is a Useful Tool for Financial Planning, but It Can’t Replace a Trusted Advisor’s Personal Touch

Steven Kohler


Nancy I. Kunz


Many in our industry believe that Artificial Intelligence (AI) could reshape the financial planning industry and the way advisors engage with clients. But while AI can help automate many tasks and streamline processes, the human touch remains irreplaceable when it comes to understanding clients' unique needs and providing holistic financial advice. Artificial intelligence can’t think, counsel and strategize like a financial adviser, and over-reliance on AI can lead to a lack of critical thinking and analysis of the prevailing context, which can be detrimental to financial decision-making.

That said, we all need to understand that AI will continue to impact many aspects of our lives in the future. It would be wise to understand its benefits and limitations, especially as it relates to financial planning and our ability to serve our clients. In the financial services industry, AI is already creating efficiencies that can free advisor’s time to focus more on strategic, advisory-related and relationship-oriented tasks.

As we embrace these aspects of Artificial Intelligence as a useful tool, it is important to highlight where it falls short in terms of delivering bespoke solutions to our clients’ complex issues. The central issue is the trust factor as it relates to human relationships. When one’s finances are at stake, particularly during difficult economic times, the human touch is an invaluable source of trust and resolve.

Here are some important ways advisors build trust with their clients, and why we do not believe AI will ever replace the need for human-centric advisory relationships:

1. Empathy and Emotional Intelligence:

While AI can process vast amounts of data, it lacks the emotional intelligence and empathy that human advisors possess. Clients often face emotional challenges related to money, such as fear and uncertainty. AI might overlook the conditions that can form a client’s personal goals, values and life circumstances. And when unfavorable market conditions hit, AI can lack the ability to fully understand the concerns of clients and to respond to their needs. Understanding a client’s mindset and motivations is sometimes more art than a science, especially when we talk about proactive, customized solutions.

2. Attention to Qualitative Details:

According to Psychology Today, as much as 90% of communication is non-verbal.1 This creates a significant challenge for AI as a sole financial planning resource. AI’s data-based insights may be sound in a vacuum, but there can often be other emotional or social factors that influence the ultimate decision. As a result, its ability to come up with customized solutions is diminished. For example, if during a meeting an advisor senses that the client seems worried—even if no concerns have been voiced—then the advisor will investigate those perceived emotions by seeking to understand the situation, empathizing with the client, and responding accordingly with necessary updates to the financial plan or investment portfolio. AI in its present state is not equipped to pick up on visual, emotional cues which can often provide meaningful insight into what a client needs at any given moment.

Each individual's financial situation is unique and determined by life goals, family circumstances, and personal values—they are not simply a data point in a model. When developing plans for clients, advisors hold in-depth conversations with clients to gain personal knowledge of their needs and aspirations. Incorporating key learnings from these conversations into our processes enables us to tailor financial plans that align with clients’ specific objectives. Plans created exclusively by AI models will lack these critical pieces of qualitative, personal context.

3. Understanding of Complex Client Issues:

Data and qualitative analysis represent AI’s key areas of strength. However, over-reliance on AI can lead to a lack of critical thinking, which can be detrimental to a client’s overall plan. The financial landscape can become complicated and is ever-changing. Financial planners bring years of experience and critical thinking skills to navigate situations that AI may not be capable of comprehending. We can leverage past experiences from similar situations to review and adjust financial strategies as life situations, market conditions and regulatory environments change.


The future of financial planning will rely on striking the right balance between implementing AI technology constructively and maintaining impactful human relationships. While AI can handle certain workflows such as data analysis, automation, and risk assessment efficiently, it can’t replace the empathy, emotional intelligence, and adaptability that an experienced advisor brings. Using AI as a supportive tool, financial advisors can streamline their operations and offer clients more of our time to deliver comprehensive and personalized financial advice. The powerful potential of artificial intelligence as a financial planning tool can be harnessed most productively in this joined relationship between human advisors and technology.

Thanks for reading.

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

Steven Kohler


Chief Planning Officer

Nancy I. Kunz


Senior Financial Advisor

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