As the financial industry has increasingly embraced artificial intelligence (AI), the technology has ushered in remarkable efficiencies and advancements. But investors are also increasingly concerned, specifically about AI-fueled financial fraud. According to our latest Janus Henderson Investor Survey, 73% of investors believe AI heightens the risk of financial scams, and more than half of those surveyed (56%) worried that they or their loved ones could become victims.

While these fears are understandable, investors still see value in AI, especially when it comes to streamlining their administrative tasks and delivering educational content. However, it’s clear that for investment decisions and personalized communications, clients still strongly prefer the human touch that only a trusted advisor can provide.

For financial advisors, this signals a unique challenge—and opportunity. Here’s how advisors can address their clients’ fears about financial fraud and leverage AI effectively while maintaining personal relationships that build trust.

The Rising Concern Of AI-Driven Financial Exploitation
Financial fraud has long been a concern for investors, but with AI enabling increasingly sophisticated scams, those fears have escalated. In 2023 alone, AI-powered scams led to more than $3 billion in losses. Our survey found that younger generations are particularly wary: 66% of millennials and 63% of Gen X investors expressed concern about financial fraud (baby boomers and the silent generation are less worried). The fear of younger generations may stem from their greater familiarity with AI and its potential for misuse. Many millennials and Gen X investors also worry about the vulnerability of older family members, such as parents or grandparents, who may be more susceptible to scams.

Advisors are uniquely positioned to help clients navigate this evolving landscape. While 45% of advised investor survey respondents have already received resources from their advisor to help them avoid financial exploitation, another 29% expressed interest in learning more. This presents a clear opportunity for advisors to engage with their clients on a critical issue and, in doing so, strengthen their relationships.

AI in Practice: Balancing Efficiency With Client Trust
Despite their concerns, most investors remain open to using artificial intelligence—within certain boundaries. For instance, 83% of investor survey respondents were comfortable with their advisors using AI to handle administrative tasks, and 85% were OK with AI-generated educational content. Those sorts of uses will allow advisors to boost their efficiency and focus more on meaningful client interactions.

However, there is a fine line when it comes to personal connections. More than one-third of investor survey respondents would be uncomfortable with AI being used to make investment recommendations, and 44% would object to AI-driven responses to their texts or emails. These preferences highlight an important truth: While the technology can be a valuable part of the advisor’s tool kit, clients still crave the human touch for critical decisions and personalized communication.

Practical Tips For Using AI
As artificial intelligence continues to reshape the financial landscape, advisors need to strike the right balance between harnessing its benefits and maintaining the personalized service that clients value. Here are a few practical tips for blending innovation with human interaction:

1. You should educate clients about the risks related to the technology: As AI-fueled financial fraud becomes more sophisticated, it’s important for you to be proactive in educating clients. Regularly communicate with them about how to identify and avoid scams, offering resources that help them protect themselves. (Janus Henderson has formed a partnership with Wayne State University and its Institute of Gerontology. The partnership’s website, OlderAdultNestEgg.com, discusses ideas such as how to survey older clients about their financial decisions and assess their vulnerability.)

2. You can use artificial intelligence for your own administrative efficiency: By automating administrative tasks such as data entry, document processing and account maintenance, you can save time while reducing the risk of human error. This allows you to focus on higher-value activities, such as deepening client relationships and developing personalized investment strategies.

3. You’ll want to maintain human control over investment decisions: While AI can analyze data and offer insights, the ultimate investment decisions should remain firmly in the hands of advisors. This ensures that clients receive a customized approach that reflects their unique needs, risk tolerance and long-term goals.

4. You should keep your communications with clients direct and personal: Clients highly value human interaction, especially when it comes to discussing their financial future. This is why it’s crucial that advisors personally handle direct communications to build trust and reassurance. Direct communication via in-person meetings and phone conversations is the most impactful.

5. Remember to stay ahead of the AI curve: As the technology evolves, so too will its applications—and risks. You should stay informed about the latest AI trends, both to enhance your practice and better educate your clients about the potential pitfalls.

In the artificial intelligence era, there is no question that you face a dual challenge: To embrace the technology’s benefits while also safeguarding your clients. On the one hand the tech will help you streamline your operations, but you should also offer ongoing education to clients about its benefits and pitfalls. In any case, it won’t replace direct and personal connections, and you’ll want to make sure that, even as you enhance your efficiency, you preserve the trust and personalized service that clients seek.

Matt Sommer is head of the Specialist Consulting Group at Janus Henderson Investors.