A Look Ahead at the Financial Services Firms of the Future

The American College of Financial Services recently took part in a research gathering exercise that examined a compelling vision for what the financial services industry will look like five years down the road, including the massive impact of artificial intelligence (AI) on virtually every aspect of modern life. This also included consulting with members of the faculty and culminated in a sit down with President and CEO, George Nichols III, CAP®, to discuss his views on the topic. Ultimately, members of The College leadership believe AI will not replace professional advisors but rather supplement their efforts and make individual advisors and teams stronger. But what does that really mean?

The Role of Humans in Financial Services

While many advisors may be familiar with the “retirement cliff” the financial services industry faces over the next decade, there are also some bright spots: for example, the U.S. Bureau of Labor Statistics projects a 13% growth in personal financial advice jobs by 2032, far outpacing average growth across all fields. Much of this has to do with the so-called “Great Wealth Transfer” of Baby Boomers to Gen X, Millennials, and Gen Zers, but it is also an acknowledgement of the rising importance of specialized financial guidance.

What does it mean to specialize? In a world where AI can offer general guidance on finances just as easily as humans, advisors need to become more than just generalists and truly understand their clients’ concerns in ways only another human can. The business of financial services can, and should, evolve to be less about the “how” (easily handled by AI) and more about the “why” (the domain of human emotional intelligence and intuition). Specialized financial knowledge, including advanced designations, can offer at least part of this equation — and indeed, many of the specialized designations The College offers include lifecycle-based education and behavioral finance components. In the end, financial services is fast becoming a field based on personal relationships. Research from top firms like Capintel should trust is the top quality clients look for in an advisor (72%), well above investment performance (50%).

“In a world of automation, human insight is the ultimate differentiator,” says George Nichols III, CAP®, president and CEO of The College. “You need a human who works with technology and technology that works with humans to maximize planning outcomes.”

The Role of Technology in Financial Services

“The best technology isn’t just smart: it’s collaborative,” says Nichols. “AI isn’t going to replace you, but the advisor who knows how to partner with it might.”

To explain his ideas about how AI and other evolving technologies will fit into financial services, Nichols outlined the concept of the “Five Es”:

• Experience: Clients and advisors alike expect technology to be intuitive, seamless, and proactive in making their respective experiences better. “The experience,” Nichols explains, “is the new currency in financial services.”
• Efficiency: Technology must save advisors and clients time and money.
• Effectiveness: “If efficiency is table stakes, effectiveness is the real goal,” Nichols says. “Technology must meaningfully improve outcomes, including real-time scenario modeling, risk analysis, and proactive alerts.” All of these, he says, can elevate the advisor’s role.
• Error-Free: Being error-free doesn’t just mean improving the existing technical systems we have now; technology must detect and correct errors before they become bigger liabilities. Personalized reminders, compliance automations, and more are examples of how this idea can allow advisors to scale — the key to greater success.
• Educational: The hybrid future of advisors and technology will blend e-learning, AI-curated content, and personalized coaching for an ongoing educational experience for clients and advisors alike — including The College’s one-stop platform for foundational and specialized financial knowledge.

In turn, these ideas will foster better work-life balance for financial professionals as advisors are better able to monitor client moods, sync calendars, and recommend content all in a single virtual ecosystem. Nichols says he sees the future of AI in particular as vendors developing customized products for organizations in need of technology to assist with niche functions.

Building the Firm of the Future

It’s no secret that financial services is becoming more complex, and therefore more difficult for the average client to understand — but as we’ve seen, building greater trust is fundamental to business success, and that starts with better communication and transparency. How does that shape the financial services firms of tomorrow?

Diversity in viewpoint, experience, and background is one way things will likely look different in the years ahead. Research from McKinsey and Harvard Business Review show racially diverse teams overperform in profitability and client innovation. In addition, many firms are now  not only open to hiring, but also actively recruiting, aspiring advisors who have degrees beyond finance, in fields like data science, psychology, and education, as these represent greater emotional intelligence and tech skills necessary to prosper in an experience-driven and AI-informed future.

Naturally, Nichols acknowledges that no single advisor can master all these things — and that’s okay. “Teaming is table stakes,” he says. “Future practices will resemble agile squads, with integrated teams combining holistic planning, investments, insurance, and behavioral coaching.”

In the end, Nichols says, it all goes back to fostering trust: the firms and advisors who lean into trustworthy practices in the form of greater transparency with clients, simplified compensation models, and other methods stand to grow the most in the years ahead.
 

More From The College

• See where you can get specialized knowledge for enhanced client service
• Read more takeaways
• See how College leaders are looking at the future of financial advice