As concerns about the advancements in artificial intelligence (AI) continue to echo throughout corporate boardrooms, Kristie Edling-Day, Executive Vice President and CIO of Technology Advisor Experience at LPL Financial, remains steadfastly optimistic. She firmly believes that financial advisors, as a collective, will adapt and harness the power of technology to better serve their clients.
Looking to history for evidence, Edling-Day points out two significant examples: the rise of portfolio management technology in the 1980s and the more recent emergence of robo-advisors. In both cases, initial fears eventually subsided as these technological tools found their rightful place alongside human financial advisors.
To support her case, Edling-Day cites a statistic from her former employer, Vanguard: 90% of people currently using a human advisor would not switch to a digital solution, while 88% of those using a digital solution would consider switching to a human advisor. This data showcases the enduring value and trust in human advice.
As the Executive Vice President and CIO of Technology Advisor Experience at LPL, Edling-Day oversees all digital and service aspects of the company’s flagship platform, ClientWorks. This platform is utilized by LPL’s impressive network of 21,000 advisors, 500 RIAs, and 1,000 institutions throughout the United States.
Before joining LPL earlier this year, Edling-Day held the position of CIO for Vanguard’s financial advisor and institutional investor businesses. During her 17 years at Vanguard, she played a pivotal role in developing business strategies and leading technology transformation.
In a recent episode of The Way Forward podcast_,_ Edling-Day shared her recommendations for advisors to ensure that technology becomes a friend rather than a foe. Here are her key suggestions:
Demonstrate the Value of Human Advice
Clients often need to rely on their advisors’ courage and conviction to weather market turbulence and maintain discipline. Unfortunately, the true value of this guidance may not be explicitly reflected on a statement. However, looking back at the events of 2020 and the subsequent market recovery, it becomes evident that an advisor’s fees are justified by the long-term advantages they provide.
It is crucial for financial advisors to continually emphasize and demonstrate the unique value they bring to the table, assuring their clients that human advice is irreplaceable even in the face of technological advancements.
As the financial industry continues to evolve, it is essential for advisors to embrace technology as a powerful tool that complements their expertise and enhances their ability to serve clients effectively. By doing so, they can navigate the fast-changing landscape while maintaining their position as trusted guides in the ever-evolving world of finance.
The Limitations of AI
As the advancements in artificial intelligence (AI) continue to grow, it is crucial for us to recognize and understand its limitations. While technologies like ChatGPT excel in knowledge-based standardized tests, they struggle when it comes to tasks that require human judgement and understanding, such as AP English literature. This is where the true expertise of an advisor comes into play.
Leveraging Technology for Simple Tasks
Rather than viewing technology as a threat, financial advisors should embrace it as a tool for offloading simpler tasks. By thinking of technology as a form of low-cost delegation, advisors can focus on their unique skills and knowledge. It’s important to identify where you are irreplaceable and where technology can enhance your capabilities. Instead of seeing it as a competition between humans and machines, combining the strengths of both can lead to growth and success for both advisors and their clients.
Building Trusted Relationships
In the financial industry, establishing and maintaining trusted relationships with clients is paramount. According to Ben Coombs, a member of the CFP Board’s inaugural class, investors value the personal connection with an individual rather than relying solely on websites or flashy media presence. Clients yearn for trusted relationships, and once they find them, they hold onto them tightly. Advisors should prioritize building trust through comprehensive financial planning rather than merely focusing on asset management. By doing so, they can create lasting partnerships that withstand the test of time.