The Meteoric Rise of AI Among Financial Advisors: Q&A with Advisor360°’s Darren Tedesco
Artificial intelligence (AI) is increasingly being integrated into the work of financial advisors, transforming how they manage client relationships, analyze data, and streamline operations—though it comes with both opportunities and challenges.
The adoption rate of AI among financial advisors is significant and rising. According to industry insights, a large majority of financial services companies are either using AI or exploring its potential. Surveys indicate that many advisors see AI as critical to their future success, with 85% of them increasingly warming up to generative, according to Advisor360°.
A year ago, 64% of them saw it as a “help.” That’s a big jump in confidence, and it’s backed by 76% saying they’re already reaping tangible perks from Gen AI tools, including predictive analytics and summarizing meeting notes, the wealthtech provider reported.
However, the use of AI is not without hurdles. Many advisors—up to 95% in some studies—feel unprepared to fully embrace it due to a lack of technical skills or understanding of its risks. Concerns about data integrity, regulatory compliance, and the potential for AI to “hallucinate” or generate inaccurate outputs persist.
Human oversight remains essential, as advisors must verify AI-generated insights to uphold their fiduciary duty. Regulatory bodies are still catching up, with no specific AI regulations in place yet, though frameworks like the SEC’s guidelines and emerging policies from the U.S. and EU signal future oversight. Ethical considerations, such as ensuring AI doesn’t prioritize profit over client interests, also loom large.
Darren Tedesco, President, Advisor360°, shared his views with Connect on some of the company’s additional survey findings, including the possibility that generative AI will replace human financial advisors, tools advisors are relying on that include generative AI, and are advisors even aware they’re using it, among other topics.
CM: How are clients responding to AI in financial advising?
DT: Individual investors are tech-savvy, and as a result, they have high expectations when it comes to how their financial advisors use technology to engage with them. Advisor360°’s own research indicates that clients will switch advisors if their tech needs are not met. As AI becomes more integrated into daily life, it’s no surprise that investors are open to AI-driven tools enhancing their advisory experience. However, while AI and generative AI hold great potential, clients and advisors alike expect human oversight for core financial planning and decision-making about their assets and investment portfolios.
CM: Will generative AI replace human financial advisors?
DT: Gen AI won’t replace financial advisors—but it might replace advisors who don’t use AI. Our survey found that advisors today overwhelmingly see AI as a tool to enhance their work, not make them obsolete. Only 8% of advisors now view AI as a “threat”, that’s down from 21% who viewed it as such last year. This is not the existential crisis that some were worried about just 12 months ago.
CM: Are there risks or challenges with this surge in AI use?
DT: Advisors and firms need to ensure that Gen AI use complies with regulatory guidance—so, books and records-keeping—and that there is proper security protocol around data–including where it’s stored, who has access, etc. Advisor360°’s research shows that firms are adopting policies to help enforce advisor compliance, and the same rigor needs to be applied to third-party AI vendors and their handling of client data.
CM: What tools are advisors relying on that include generative AI?
DT: According to our survey, advisors are most frequently turning to AI- and Gen AI-enabled tools for help with predictive analytics, marketing and note-taking. Advisors are least likely to leverage AI for developing personalized financial plans–just 29% of the advisors in our survey utilize AI-enabled tools for this today. It seems that for the time being, using Gen AI to create financial plans appears to be a bridge too far, in part because of compliance concerns.
CM: Are advisors fully aware they’re using generative AI daily?
DT: Yes and no. While advisors know that Gen AI underpins certain tools—tools like meeting transcription and note-taking—there are other instances where the presence of an AI agent may not be as obvious. There is often a daisy-chain effect, when a vendor’s tool may not explicitly state that Gen AI is being applied but the vendor’s vendor might have an AI agent hard at work underneath the hood.
