AI financial advisors: the new world of financial advice

1 min read by Unbiased team Last updated January 31, 2025

Explore how AI is transforming financial advice. Discover the pros and cons of AI financial advisors and how to make informed decisions for your future.

Key takeaways
  • AI financial advice uses advanced technologies like machine learning and data analytics to provide tailored recommendations.

  • Human advisors remain essential for providing personalized and nuanced guidance, which AI capabilities can bolster. 

  • Hybrid models that combine AI tools with human expertise are considered the best AI for financial advice.

  • Unbiased will match you with a financial advisor best suited to meet your financial needs and goals.

What is AI financial advice?

AI financial advice is a modern approach to guiding financial decisions using cutting-edge technologies like machine learning, natural language processing, and advanced data analytics. These systems analyze vast datasets to generate actionable insights tailored to individual or organizational financial goals.

There are two primary models for delivering AI-powered financial advice:

Robo-advisors

First, fully automated tools, such as robo-advisors, operate on predefined algorithms to manage portfolios and offer investment recommendations.

Robo-advisors are a popular example of automated AI tools. They provide low-cost, efficient financial management for a wide range of users. While these tools are efficient, they lack a human touch.

Hybrid model

Hybrid models represent some of the best AI for financial advice. They blend advanced technology with the expertise of human advisors, delivering data-driven accuracy while ensuring a personalized, empathetic approach to financial planning.

Human financial advisors increasingly incorporate AI into their workflows because it enhances advisory services by providing a foundation of accurate data.

For example, advisors might use AI to assess market trends or identify opportunities within a client’s portfolio. This enables them to focus on higher-value tasks, like offering tailored advice during major life transitions.

The rise of AI in financial advice

AI in financial advice is fundamentally changing the way financial services are delivered, offering tools and technologies that enhance both efficiency and personalization. From automated portfolio management to predictive analytics,

Financial institutions worldwide are investing heavily in these innovations, with global spending projected to grow from $35 billion in 2023 to a staggering $97 billion by 2027.

At the heart of AI’s transformation is its ability to process and analyze enormous volumes of data in real-time. By identifying trends and patterns, AI can generate personalized recommendations tailored to individual financial goals, whether they involve investment strategies, retirement planning, or risk management. These capabilities are reshaping financial advice, making it more precise and accessible than ever before.

Financial advisors are also embracing AI to enhance their services.

Advisors can use AI tools to monitor markets, model financial scenarios, and automate routine tasks, allowing them to focus on providing nuanced and empathetic advice. This partnership between technology and human expertise ensures that clients benefit from the efficiency of AI and the insight of experienced professionals.

What are the pros and cons of using AI for financial advice?

Using AI for financial advice has both benefits and downsides:

Pros of using AI for financial advice

  • Cost-effectiveness and accessibility: Many AI platforms are affordable, making financial advice accessible to clients who may have previously found traditional services too expensive.

  • 24/7 availability and real-time updates: Clients can access their accounts or seek guidance at any time, eliminating the need to wait for business hours.

  • Impartial recommendations: AI bases its analysis on objective data, avoiding the emotional biases that sometimes influence human decision-making.

  • Scalability: AI systems can serve millions of users simultaneously, meeting the needs of both individuals and organizations.

Cons of using AI for financial advice

  • Lack of personalized human empathy: AI struggles to replicate the understanding and compassion of a human advisor, particularly during emotionally charged situations.

  • Privacy concerns and data security issues: Sharing personal financial information with AI tools raises legitimate concerns about data breaches and misuse.

  • Dependence on high-quality input data: AI relies on accurate and comprehensive data to function effectively. Poor data inputs can lead to flawed recommendations.

  • Legal and compliance challenges: Ensuring AI systems comply with US financial regulations adds complexity and potential risks for users and providers.

AI vs. human financial advisors: which is better?

When comparing AI financial advice and human advisors, the following considerations are important:

Cost: AI platforms are generally more affordable, making them appealing to budget-conscious clients.

Accessibility: AI tools are available around the clock, providing instant insights.

Personalization: Human advisors excel in tailoring their advice to individual circumstances, offering nuanced insights that AI cannot match.

Expertise: While AI is efficient at processing data, human advisors bring deep industry knowledge and strategic thinking to the table.

This is why hybrid models, combining AI’s analytical strengths with the personal touch of human advisors, are becoming increasingly popular.

These systems offer a practical way to balance cost, accessibility, and personalization, ensuring clients receive high-quality advice.

Human advisors, with their ability to form lasting relationships, remain essential for complex financial planning and navigating major life events.

What is the future of AI financial advice?

The future of AI financial advice will likely involve more advanced predictive analytics and seamless integration with other financial technologies.

AI systems are expected to become increasingly intuitive, anticipating client needs and identifying opportunities for growth before they arise.

For instance, AI could suggest portfolio adjustments as market conditions change or flag potential risks before they escalate.

Ethical considerations will play a crucial role in shaping the industry’s future.

Financial institutions must prioritize data protection, transparency, and compliance with regulatory standards to ensure trust in these systems. Human oversight will remain essential to maintain a balance between technological innovation and accountability.

Will AI take over financial advisor jobs?

Concerns about AI replacing human financial advisors are understandable but largely unfounded.

While AI for financial advice is efficient at processing data and automating routine tasks, it cannot replicate the empathy and relational skills that human advisors provide.

For example, clients often seek human advisors during pivotal moments in their lives, such as retirement planning or managing a significant financial windfall. While these situations require technical expertise, an understanding of the client’s emotional and psychological needs remains essential.

No matter how advanced, AI systems cannot fully address these dimensions.

AI is poised to enhance the capabilities of human advisors instead of replacing them. By handling time-consuming tasks like data analysis and market tracking, AI allows advisors to focus on building relationships and addressing complex challenges. The collaboration between human expertise and AI-driven efficiency will define the future of financial advisory services.

Find the right financial advisor

AI is changing how financial advice is delivered, making it more accessible and tailored to individual needs. While AI financial advice offers speed and accuracy, human advisors bring empathy and a deep understanding of life’s financial complexities.

By combining the strengths of both, people can feel confident in their financial decisions, knowing they have access to technology-driven insights alongside personal, expert guidance.

Let Unbiased match you with a professional financial advisor for expert personalized advice you need to achieve your financial goals.

Writers

Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.