Advisors are increasingly taking advantage of generative artificial intelligence. And not just in the back-office, but for client communications, as well.
While clients might not care, and may even expect its use in marketing campaigns, direct emails are another matter entirely.
Many say they can tell right away when a robot and not their human advisor is talking to them. And when they do figure it out, the amount they’re willing to pay for the advisor who outsources their relationship in this way is severely hampered.
Why am I paying you this much?
A Morningstar webinar held Tuesday, “Balancing Relationships and AI: What Investors Value in Financial Advisors” explored the findings of their recent study, “What Do Investors Think About Generative AI In Financial Advisors’ Workflow?” Originally published in September 2024, the survey included over 1,800 investors from the U.S., U.K. and Australia.
Respondents reported almost no impact on their relationship when it came to marketing communications.
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However, that was not the case when it came to advisors who used generative AI to craft personalized emails. Investors said they would be willing to pay an average of $74 per hour for advisors who wrote their own emails. That figure dropped to $54 per hour when investors knew AI was involved.
“There is a bit of skepticism sometimes in the way that we interact with AI,” said Thomas Aviles, vice president of business development and advisor-client experience at Morningstar, during the webinar. “I know that when I receive emails, it’s like, ‘Did they really write this, or was that AI?’ [They] have to be honest about the AI tools that they are using.”
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The main point: Don’t insult a client’s intelligence.
“We all see AI-generated stuff all the time, and if you’re thinking, ‘I got the AI to personalize it. They won’t know.’ They’ll know,” said Danielle Labotka, a behavioral scientist at Morningstar.
Marketing is one thing, direct communications is another
Marketing companies have been steadily rolling out AI-powered innovations, which many advisors have already begun utilizing. On Tuesday, marketing firm FMG rolled out several new AI tools for compliance, marketing assistance and content creation. The same day, marketing technology firm Snappy Kraken debuted an AI-powered lead conversion suite.
Wyatt Mayham, CEO and co-founder of Northwest AI Consulting, works with RIAs and financial platforms looking to integrate generative AI into their marketing and client communication workflows. He said most advisors he speaks with are open to using AI for back-office tasks or templated marketing, but certainly more cautious when it comes to direct client relationships.
“The Morningstar study lines up pretty close with what we’ve heard: Clients are fine with AI helping behind the scenes, but they do expect actual human judgment when it comes to advice, tone or empathy,” he said.
Fergal Glynn, chief marketing officer at AI security firm Mindgard, said he uses generative AI for some client communications, but only on a limited basis. He said he mainly uses it for drafting generic content, such as marketing materials or newsletters, where there is no need for any personal touch.
“I prefer to personally write direct emails or anything that requires a personal, empathetic touch,” he said. “It is imperative to keep the human connection, especially when the conversation is specific to a client’s situation.”
In the case of direct emails or personalized recommendations, Glynn said he believes clients want to feel the presence of a real person behind the message.
“If clients find out that AI generated a personal email, they might feel let down and may question my knowledge and interest in them,” he said.
Automated communications can damage trust and value
If clients found out that the personalized message they just received was written by ChatGPT, they’d likely feel the advisor is cutting corners, said Mayham.
“Personally, I’d feel the same way,” he said. “If the trust between the advisor and client dips even slightly, it makes the fee pressure worse. So while AI can absolutely make advisors more efficient, the trick is to support the relationship, not pretend to replace it.”
Clients would also probably feel that they should pay less if they realized that he was using AI for personal communications, said Glynn. He said people tend to link the value of advice directly to the effort and skills involved.
“If they think that AI is doing the heavy lifting, they might assume that my job is easier and not worth as much,” he said. “That is why I am very careful about where and how I use AI. I make sure that the personal side of my work stays truly personal and authentic.”
