10 key stories on AI and wealth management in 2024

As he often does, Michael Kitces had a way of summing it all up.

Kitces, the “chief planning nerd” at Kitces.com, co-founder of the XY Planning Network and head of planning strategy at St. Louis-based Buckingham Wealth Partners, spoke with industry consultant Suzanne Siracuse in a fireside chat that opened the second day of Financial Planning’s ADVISE AI conference in Las Vegas.

“I can’t be wrong,” he said about his work as an advisor. “The whole relationship is trust-based, and I can’t lose the foundation of trust. So in a financial advisor context, if someone comes to me with AI and says, ‘I made an amazing AI piece of technology that’s 99% accurate’ — cool. So I’m going to be sued once every year. My goal is to not be sued once in 30 years, because the moment I do, that goes on my regulatory record in every disclosure document I have to present in front of every future client for the rest of my life.”

Kitces was saying what many advisors and others were thinking this year: Can we trust AI? That issue of trust, or the lack thereof, was one of the overarching themes of artificial intelligence in the wealth management industry in 2024.

When OpenAI turned the world on its ear in November 2022 by releasing the game-changing ChatGPT, no one knew how quickly things would change.

But, suddenly, the AI race was on.

By the end of 2024, seemingly every financial technology company offered some sort of AI functionality, whether anyone on the user side asked for it or not.

And advisory firms did find ways to incorporate AI applications. Survey after survey released this year found that advisors appreciated the new technology’s ability to eliminate what JPMorgan Wealth and Asset Management Head Mary Callahan Erdoes called “no-joy work” — the mostly rote, repeatable tasks on the back-end of the businesses. And AI wasn’t all behind the scenes. Client-facing tools such as chatbots also found their way into tech stacks this year.

However, some clients expressed skepticism with this new technology. And they had legitimate cause for concern. Hallucinations abounded in which AI chatbots asserted utter nonsense as if it were unassailable truth. One memorable example occurred earlier this year when Google’s new AI search tool extolled the health benefits of eating rocks and suggested non-toxic glue could be used to make cheese stick to pizza crust.

This lack of dependability weighed heavily on advisors, even as they adopted these tools. In the back of many of their minds? The worry that even as they adopted these time-saving tools, they might be putting themselves out of business. After all, if a chatbot could do an advisor’s job just as well as an advisor, why should anyone pay for financial advice?

The answer, as advisors said again and again, is that this is a relationship business. As we enter 2025, it’s clear that no matter what new advancements this technology brings, a valued connection has to remain. Any application of AI must keep the human somewhere in the…