Can a chatbot like ChatGPT take the place of advisors?

Just recently, the new AI complex-learning model passed part of the Wharton MBA exam, answered U.S. medical licensing exam questions with a passing grade and scored a 50 out of 95 on the multistate bar exam.

So it’s probably just a matter of time before ChatGPT, developed by San Francisco-based OpenAI and still in its infancy, is able to provide investors with more comprehensive financial planning and investment advice, a panel of broker-dealer CEOs admitted in late January at the FSI OneVoice conference in Palm Desert, Calif.

“ChatGPT just passed the bar exam, so how long before it is able to get a Series 7?” asked Amy Webber, CEO of Cambridge Investment Research Inc.

FSI President and CEO Dale Brown moderated the “Re-energizing for the Long Run” panel of CEOs, which included Doug Ketterer, CEO and founding partner of Atria Wealth Solutions, and Tim Stinson, president of Cetera Advisor Networks. (Ketterer, Stinson and Webber are all FSI board members.)

“I don’t believe that the vast majority of investors are going to suddenly decide they just want to do business with an algorithm, but it gives the industry something to worry about,” said Webber, whose firm generated $1.5 billion in revenues in 2022, 88% through recurring fees.

Rather than worrying that artificial intelligence will replace advisors, the industry has to be able to develop its own AI to allow advisors to maximize their time and profitability instead of handling too many time-intensive tasks manually, she said.

“AI has to work and have the impact that we expect it to have. We’ll have to do more with less for the advisor. We need to enable them to provide advice in a human way,” she stressed.

Creating tech efficiency will become an even greater imperative if the industry can’t replace all or some of the 40% of advisors that are earmarked to retire in the next decade, she added.

Ketterer said he doesn’t think the industry has to worry about losing business to a chatbot immediately.

“I don’t think we’ll lose clients and revenues in the next five years. I think most clients want to work with advisors, but this is definitely on the horizon,” said Ketterer, whose firm Atria Wealth Solutions generated $600 million in 2022 and is “50-50 managed money and traditional brokerage, three-quarters annuitized.”

“In a prior life, I got a call from an advisor who said, ‘Why don’t we have a robo-advisor? I just lost two $50 million clients to a robo-advisor.’

“I said to him, ‘The question is not why don’t we have a robo-advisor, but how are you servicing these clients that you’re losing them to a robo-advisor?’ By the way, the robo-advisor is not around anymore,” Ketterer said.

Webber said the real threat is that many dually registered advisors are still transactional and not providing comprehensive financial planning. Some “83% of clients want a comprehensive financial plan, but apparently clients don’t think their advisors are doing that,” she added, citing a 2022 J.D. Power survey of 4,396 investors who work directly with a dedicated financial advisor or team of advisors.

Stinson, whose firm Cetera Advisor Networks generated $1.2 billion in revenue in 2022, 60% of it transactional, said “technology for us is not a replacement for a person, it’s an enabler. How do you get there? It starts with the right platform and enabling the advisor.”

To help advisors who work with Cetera evolve, the firm recently created a mobile application for client use and continues morphing its legacy system “into a wealth hub that integrates wealth and investment management, planning tools and succession strategies in a centralized state to support human capital,” Stinson added.