The Impact of AI on Financial Planning and Investment

March 17, 2025

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Executive Summary

Artificial Intelligence (AI) is significantly transforming the financial planning and investment industry by enhancing efficiency, providing personalized advice, and automating routine tasks. Current integration spans data analysis, risk assessment, and client engagement, with market projections indicating a growth from $17.5 billion in 2023 to over $73 billion by 2031 according to Insight Ace Analytic.

Key findings include:

  • Industry Adoption: 91% of financial services firms are either exploring or deploying AI according to a 2024 NVIDIA survey
  • Revenue Impact: 86% of financial institutions report that AI has boosted revenue, while 82% say it has lowered costs, as noted by Coherent Solutions
  • Market Projection: The AI in financial planning market is forecast to exceed $73 billion by 2031 (over 20% annual growth) according to PwC reports
  • Human-AI Balance: While AI excels at data processing and pattern recognition, human advisors maintain advantages in emotional intelligence, ethical judgment, and building client trust as highlighted by WEF research
  • Future Trends: By 2027, AI tools are predicted to become the primary advice source for retail investors, with usage potentially rising to ~80% of investors by 2028 according to Deloitte analysis

Current State of AI in Financial Planning and Investment

AI Leaders and Tools in Financial Planning

  • BlackRock's Aladdin platform uses advanced AI algorithms for risk oversight and portfolio optimization
  • Robo-advisors like Betterment and Wealthfront leverage algorithms to provide automated investment planning
  • Morgan Stanley launched an OpenAI-powered assistant ("Debrief") to help its 15,000+ advisors with meeting notes and client Q&A, attracting nearly $64 billion in new assets as reported by The Daily Upside
  • FP Alpha uses AI to analyze client financial documents for advisors

Current Applications

  • Client Profiling: AI-driven CRM systems automatically segment clients and predict needs as discussed in Itransition's research
  • Portfolio Strategy: AI-driven analytics evaluate market trends and optimize asset allocations according to Investopedia
  • Automated Advice: Robo-advisors offer planning and investment advice via web or app as noted by Financial Planning
  • Back Office: AI handles clerical tasks like preparing reports and scanning documents according to Just Vanilla

AI Capabilities vs Human Skills: Strengths and Limitations

Aspect AI Strengths Human Strengths
Data Processing Processes vast datasets at superhuman speed; identifies correlations and anomalies as demonstrated in McKinsey research Understands context and nuance; applies common sense to data interpretation
Reliability Operates without fatigue or emotional bias; provides consistent analysis according to WEF research Adapts to unique situations; handles ambiguity; applies ethical judgment
Client Interaction Provides 24/7 support via chatbots; delivers consistent factual responses Builds trust through empathy; navigates sensitive discussions; provides emotional support as noted in Bankrate analysis
Decision Making Makes data-driven recommendations based on statistical patterns, with studies showing AI achieving 60% accuracy in predicting earnings changes vs. 53-57% for humans Handles unique situations; applies judgment in ambiguous scenarios; considers values according to Accenture's research

Surveys indicate roughly 80% of investors are open to AI help in managing their portfolio, yet less than half would entrust their money to a fully AI-driven advisor with no human oversight according to Itransition's report.

Future Outlook: Evolving Role of AI for Planners and Investors

Market Projections

  • AI in financial planning market forecast to exceed $73 billion by 2031 according to Insight Ace Analytic
  • By 2027, AI tools predicted to become primary advice source for retail investors based on World Economic Forum data
  • 80% of asset and wealth managers say disruptive tech like AI will fuel revenue growth according to PwC research
  • 97% of financial companies plan to increase AI spending in the near term as reported by Coherent Solutions

Expected Technological Advancements

  • Evolution of Large Language Models into specialized financial advisors as analyzed by WEF
  • AI agents monitoring markets 24/7 and executing trades based on real-time strategy rules as anticipated by Netguru
  • Dynamic financial planning with continuous adjustments as new data emerges according to MIT Sloan research
  • Hyper-personalization of advice and products for niche client segments as described by CoinDesk

Implications and Adaptations for Industry Stakeholders

For Financial Planners

  • Role Evolution: Routine analytical tasks can be offloaded to AI, allowing focus on client relationships according to WEF analysis
  • Enhanced Human Skills: Communication, empathy, and holistic thinking become more important as highlighted by Accenture
  • Tech Proficiency: Advisors must learn to effectively use AI tools in their practice as noted in Financial Planning's report
  • Career Development: Roles may evolve into "financial curator" or strategist according to KPMG research

For Financial Firms

  • Technology Investment: Heavy investment in AI software and infrastructure as exemplified by Morgan Stanley's initiatives
  • Workflow Redesign: Implementing automated processes for client meetings and compliance as discussed by PwC
  • Talent Acquisition: Increased demand for professionals with dual expertise in finance and AI according to McKinsey
  • Business Strategy: Expanding client bases by leveraging AI to serve smaller accounts as shown by Barron's research

For Investors

  • Greater Access: Sophisticated advice at lower cost through robo-advisors as reported by Financial Planning Association
  • On-Demand Advice: Instant answers to financial questions according to World Finance
  • Critical Evaluation: Developing skills to question AI outputs when appropriate as advised by Kiplinger
  • Privacy Awareness: Being mindful of data security when using digital platforms as cautioned by LeewayHertz

Conclusion

The impact of AI on financial planning and investment is profound and transformative. We are witnessing a shift in which AI augments nearly every aspect of the advisory process – from client acquisition and needs analysis to portfolio management and ongoing advice delivery.

AI is elevating the financial planning industry to a new level of productivity and personalization, but it will not render human advisors obsolete. Instead, it is redefining how professionals add value, pushing the industry toward a hybrid model that offers the best of both worlds: the analytical might of AI and the nuanced wisdom of human advisors as indicated by World Economic Forum research.

Sources

Data and insights from industry surveys, regulatory releases, and expert commentary published in 2023-2025, including reports by WEFORUM.ORG , SEC.GOV , INVESTOPEDIA.COM , FP-ALPHA.COM , THEDAILYUPSIDE.COM , COHERENTSOLUTIONS.COM , INSIGHTACEANALYTIC.COM , PWC.COM , BARRONS.COM , FINRA.ORG , ACCENTURE.COM , FINANCIAL-PLANNING.COM , ITRANSITION.COM , FINANCIALPLANNINGASSOCIATION.ORG , BLOGS.NVIDIA.COM , JUSTVANILLA.COM , MIT SLOAN , NETGURU , MCKINSEY , and BANKRATE.