How AI is changing the landscape of financial advisors

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How AI is changing the landscape of financial advisors

It can disrupt people's comfort zones and change the status quo, and history has shown that untested technology can have unintended consequences. The arrival of artificial intelligence has generated a surge of investment in AI startups and new applications. In my circles, our friends and family are playing with tools like ChatGPT to get a sense of the opportunity and opportunities ahead. AI, as with any new feature, can enhance parts of your business or disrupt work, making client interactions more challenging. Jordi Visser from Weiss Multi-Strategy Advisers discusses where and how your clients will first encounter AI technology. Over 300 million jobs worldwide will be significantly affected by AI technology, and the most at-risk are white-collar workers. Interestingly, repeating Internet searches list roles that AI will automate and could impact, yet the role of 'advisor' or 'financial planner' is not targeted to be abolished by emerging technology.

As financial advisors know all too well, trust is the bedrock of all relationships. It is alleged that trust takes years to build, seconds to destroy and forever to repair. When trust collapses, it has a negative impact on how we interact and function, a troubling thought for investors facing no shortage of headwinds. A key component of building trust is authenticity - the capacity to be truthful, transparent and act with integrity, which is essential for advisors as they work to strengthen relationships with clients, build new ones and expand practices.

Nearly one in three investors would use artificial intelligence as their financial advisor, according to a recent survey by the Certified Financial Planner Board of Standards, the body that governs the CFP designation for financial advisors. This poses a significant danger to wealth managers, as well as raises significant concerns regarding the quality or appropriateness of the financial advice that AI may recommend.

Web3, dubbed the next phase of the internet, emphasizes decentralized networks, providing a direct, transparent connection between creators and consumers, a marked departure from prior battles against monopolistic forces. One weapon - the ability to earn and keep clients' trust - will come under pressure.

As AI systems become more sophisticated at adapting to human behavior and media, they infringe on confidence, a fundamental anchor of all successful financial advisor practices. As chatbots, deepfakes, and AI-written text efficiently impersonate real people, it fosters an atmosphere of misinformation and deception, making it a poor recipe for a happy client. In an AI-driven world, there is no trust in what is genuine, but advisors need new safeguards and a vigilant mindset to ensure that the authenticity and integrity that's been so instrumental to their success remains safe.

We believe that cost reduction is going to be one of the main advantages of blockchain. By disintermediating unnecessary steps and participants, blockchain becomes more efficient and cheaper. The fees for Bitcoin transactions are typically around $1 per transaction. Blockchain transaction fees are more transparent and cheaper, allowing for faster transaction of assets. The network is available 24/7 and transactions are typically completed in less than 10 minutes. The benefits of a 24/7 network are significant, especially when it comes to moving small amounts of money, but it isn't faster than using a blockchain, and when you want to send even larger dollar amounts, the benefits of a 24/7 network become evident.

It will take a lot of time to get it right. We believe blockchain will bring attention to blockchain, even if it is through centralized platforms. As interest rises, people will see the benefit of blockchain and begin to apply it to other aspects of TradFi. We are just seeing the start through tokenized U.S. Treasuries. With more than $1 billion in market cap, it's easy to trade into these yielding products from conventional cryptocurrencies.