Technology presents a dual-edged sword for financial advisors. On the one hand, technology can make the advisor’s job easier by expediting (or outright automating) many of the tasks that advisors do for their clients. But on the other hand, that technology can also make it easier for clients to manage their finances on their own, raising the bar for the value that human advisors must provide to make it worthwhile for clients to hire them in the face of less expensive DIY alternatives.
Despite advances in technology, human advisors remain in strong demand, and the gap between the number of clients seeking an advisor and the number of advisors available to serve them is only growing. Which means there’s something about working with a human advisor that still resonates with clients – which ultimately comes down to the advisor’s ability to connect with the client on a human level, to understand and validate their goals and values, and to motivate them to reach those goals, none of which can be fully replicated by technology.
As evidence of the human effect on financial advice, a recent study by the AI meeting note tool Jump analyzed thousands of client meeting transcripts and showed that on average, meeting with financial advisors helped raise a client’s emotional state (in terms of the feelings of positivity, confidence, and certainty they expressed) materially from the start of a meeting to the finish. The effect persisted even when external events (e.g., market volatility or events in the client’s life) negatively affected the client’s emotional state going into the meeting, underscoring the value advisors can provide when the client is feeling pessimistic or uncertain about their financial situation.
Furthermore, Jump’s analysis found that certain behaviors and actions by advisors during client meetings strongly affected their ability to influence clients’ emotional state. For instance, advisors who frequently used either empathetic statements (e.g., saying “that must be hard for you” or “you must be so excited!” in response to the client’s situation) or emotional check-ins (e.g., asking “How are you feeling about that?” when it’s less certain about how the client sees the situation) were able to raise their clients’ emotional state by nearly twice as much as those who used those techniques the least. Which gives advisors a concrete set of skills to better connect with and manage their clients’ emotional state – in other words, exactly the type of human connection that clients value most about working with a human advisor!
Ultimately, with advances in AI increasing the capabilities of technology to compete with human advisors, advisors are often told they must become experts in technology to deliver the kind of service clients demand. But the evidence shows that the better investment may be for advisors to lean into their ‘human’ abilities to connect and communicate with clients on an emotional level – because while technology is constantly evolving and today’s tech skills might be outdated in a year (or less), the human skills that clients really value will serve advisors for their entire careers!Read More…
