Has Fintech Made Financial Advisors Obsolete? (2024)

FAQs

Has Fintech Made Financial Advisors Obsolete? ›

Despite the growing need for engineers to focus on technology, financial advisors remain essential.

If you're wondering whether doom and gloom stories about financial advisors becoming obsolete, here's some reassurance: people will always need financial advice. And while technology may satisfy some of those needs, it's not a perfect solution or an adequate replacement for a human financial advisor.

AI can help in many ways–but nothing will ever replace the personal relationship between an advisor and their client. Bob Rubin is the founder and president of Rubin Wealth Advisors.

The firm's latest study, “The Cerulli Report—U.S. Advisor Metrics 2023,” finds that over the next decade, 109,093 advisors, or 37.5% of the industry headcount, are set to retire—and will take 41.5% of the industry's total assets with them as a result.

Financial advice is not just for the wealthy, but for anyone who has financial goals or a specific need and isn't sure what is the best way to meet it. You might benefit from speaking to a professional about any number of financial issues in your life, including: Buying a home or taking out a mortgage.

AI is unlikely to completely replace finance jobs, but it will significantly impact the field. Here's a breakdown of how AI will likely transform finance professions: Tasks replaced by AI: Repetitive tasks: AI excels at automating repetitive tasks like data entry, bookkeeping, and basic financial analysis.

Job Outlook

Employment of personal financial advisors is projected to grow 17 percent from 2023 to 2033, much faster than the average for all occupations. About 27,000 openings for personal financial advisors are projected each year, on average, over the decade.

His findings, predominantly based on using ChatGPT, show that it's “not at a place right now where it's going to replace investment advisors.” “I don't know when, or if, it will ever completely remove the need for registered investment advisors,” he added.

The future of financial advisory lies in the ability to build and maintain loyalty not just with the current generation of clients, but with their successors as well. This requires a shift in both mindset and practice as advisors begin embracing a more comprehensive approach to client engagement.

Lack of work ethic. It takes a lot of hard work and discipline to break into a career as a financial advisor. While many are willing to work hard for a period of time, fewer are willing and able to maintain the high-level work ethic required to survive and thrive as a successful advisor.

Do people still need financial advisors? ›

If you're a high-net-worth individual, you might need someone to give you personalized, tailored advice and make financial decisions on your behalf. That's a wealth manager. They have strong knowledge in managing investments, estates and tax planning and other financial topics.

The retention rate is low: By the fifth year, only 15-16% of advisors will still be in business. Over 90% of financial advisors in the industry do not last three years. Putting it simply: 9 advisors out of 10 would fail!

Seek professional advice

Of high-net-worth individuals, 69 percent work with a financial advisor. Compare that to just 33 percent in the general population. What's more, far and away, wealthy people consider financial advisors to be their most trusted source of financial advice—more than four times any other source.

A financial planner can make more sense if you want a deeper analysis of specific components of your finances or desire a well-rounded, long-term plan. For example, if you want to strategically buy stocks and other assets to help you achieve long-term goals, a financial planner might be better equipped to help.

The most common reason for not hiring a financial advisor is a desire for independence. A significant 52% of advisor-less respondents cited their preference for a DIY (do-it-yourself) approach to financial decision-making.

Up to 90% of financial advisors fail in 2.5 to 3 years in the business. This number is so high because the industry is full of people who are just trying to make a quick buck and are not in it for the long haul. If you want to be a successful financial advisor, you need to have a plan and stick to it.

The future of financial advisory lies in the ability to build and maintain loyalty not just with the current generation of clients, but with their successors as well. This requires a shift in both mindset and practice as advisors begin embracing a more comprehensive approach to client engagement.

The Bottom Line... No, financial advisors will not become obsolete. They WILL have to change and evolve, but they're here to stay.