AI is a powerful tool, but its true value lies in how it’s integrated into the advisory process.Alfieri/iStockPhoto / Getty Images
Will artificial intelligence (AI) elevate professional financial advice, or will it lead to a decline in service quality as profitability takes centre stage? AI’s potential lies not just in what it can do, but in how the industry chooses to use it. The future of financial advice in Canada hinges on how advisors and firms integrate AI into their business models.
Financial advice is often seen as a privilege reserved for the wealthy, leaving everyday investors with limited options – such as do-it-yourself investing through online brokerages, or robo-advisors – which often lack the empathy and contextual understanding a human advisor can offer. That’s because high-net-worth individuals represent the most profitable segment for financial institutions, perpetuating a profit-first approach that deepens existing inequities in financial advice.
In many cases, Canadians need substantial wealth to invest with an advisor. AI has the potential to shift this dynamic. If advisors and their firms are willing to rethink their service models, AI could allow them to profitably expand their reach to serve a broader range of clients, including those at lower asset thresholds.
Advisors who have influence over the way their businesses are run can grow their practices by adjusting their service model and using AI to increase their capacity, improve the client experience and offer more personalized advice. For example, a tool that assists with notetaking can free up hours each week, although the true potential of AI lies in how this newly found time is spent. It could mean taking on more clients and working with individuals across a wider range of wealth levels.
However, this opportunity comes with its own set of challenges. If advisors expand their client base too quickly without adjusting their service models, there’s a risk the quality of service they provide could be diminished. Clients might find themselves having trouble getting in touch with their advisor or feel their unique financial circumstances aren’t fully understood. This could erode trust and undermine the value of personalized financial advice.
Equally important is knowing when not to use AI. Virtual assistants and AI-powered phone agents can offer efficiencies, but in a relationship-based business, they can also come across as impersonal. When clients are anxious about volatile markets or facing major life transitions, a chatbot won’t cut it.
That’s why growth needs to be intentional. Advisors and firms must redesign how services are delivered so that capacity, technology and client expectations are aligned. For the shift to AI in financial advice to be truly effective, it requires thoughtful integration that prioritizes trust and empathy, even as technology amplifies an advisor’s reach.
AI is a powerful tool, but it’s just that – a tool. Its true value lies in how it’s integrated into the advisory process.
So, why aren’t more firms using AI to serve clients with fewer assets?
Legacy compensation models are a major hurdle. Most firms still prioritize assets under management (AUM), linking advisor pay to portfolio size, product usage or sales targets. These models incentivize a focus on high-net-worth clients while discouraging broader access to advice. Without a clear financial return, many firms hesitate to invest in AI solutions designed to support households with lower levels of investible assets.
Rewarding advisors for the quality of service provided – not just the quantity of assets managed – may encourage broader adoption of AI tools that enhance advice across wealth levels.
Diandra Camilleri is an associate portfolio manager with Verecan Capital Management Inc. in Burlington, Ont.