Generative AI is utilized to develop digital financial assistants. Gen Z are the potential clients to utilize these services. They use the vocabulary the millennials understand. It all started with robo-advisors and finfluencers. Digital assistants are another cultural shift. However, there should not be pessimism for their role, since they lack one quality which humans have — soft skills.
Financial advice is a broad concept. An advisor has also to act as a therapist, coach and teacher. Real people go beyond just execution of order. They teach you how to survive in turbulent market. Advice should go beyond data and stats.
Financial advisors are paid in two ways — they receive a percentage of customers’ investments of assets under management (AUM) each year. Alternatively, they can be paid a flat-rate fee. AUM varies between 0.25 percent to 1.5 per cent. Advisors lower the cost when the size of the portfolio grows. A comprehensive financial advice costs thousands of dollars. What is the entry barrier? It is minimum investable assets requirement. It ranges from $500,000 to $ 1 million. A decade and a half back, these factors prohibited access for millennials.
This paved the way for robo-advisors. They worked with lower AUM and no asset minimums. Many wondered whether machines would supplant humans. As time advanced, it was clear that the two could exist in symbiotic relationship. Millennials too desired to leverage some soft skills. Advising platforms launched versions with access to humans.
Gen Z is lured by generative AI since it simulates their vocabulary. They also are early adopters. Teens and 20-plus are fond of using online platforms and social media to receive financial advice. They should be clear that technology is as fallible as humans are.
Wealth management startups respond to queries by voice and text. They are available to accredited investors and offer access to human professionals.
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