Affluent Investors Use AI to Double-Check Financial Recommendations

The New Sidekick in Portfolio Reviews

At WE Family Offices, managing partner Michael Zeuner said people started openly talking about putting recommendations into chatbots about five months ago.

Matthew Fleissig, who serves as CEO and cofounder of Pathstone (an RIA managing $185 billion in assets), offered his view: "My personal opinion is that ChatGPT is the single largest investment advisor in the world right now."

Why It Matters for Advisors and Their Fees

The easy access to financial information is changing the power balance. Clients are more engaged and better prepared. "Less of our conversation is about information sharing and more about focusing on the outcome they are trying to achieve and how it actually applies to families," Lucina said.

Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter

Morningstar equity research director Sean Dunlop observed that shares of wealth management firms have already declined as AI continues to make inroads into the sector. "At a minimum, it ought to raise the floor. Like, if you're an advisor and you're keeping half your client's balance in cash in an IRA, then this really ought to be a wake up call," he added.

Dunlop expressed doubt that AI will completely eliminate traditional advisors, though he added: "I think the truth's probably somewhere in the middle where the service level is going to get better. You probably need fewer advisors to serve the pool of assets, which might itself expand a little bit, and there's going to be some group of customers that are willing to do it themselves that weren't before."

But the AI tools are not perfect. "I generally use AI to poke holes, to try to find criticisms in a way of thinking, and I think it is good for that. But more often than not, especially on the advice side, it's wrong," said Pamela Lucina.

Michael Zeuner of WE Family Offices warned that clients who do not fully understand complex topics might not catch a chatbot's mistakes. "It may be harder to differentiate between a hallucination or an error of fact versus a good insight that the engine has," he said.

Zeuner also noted that LLMs make elementary mistakes - for instance, ChatGPT told a client that two of his ETFs appeared the same, but actually one followed an equal-weight index and the other a cap-weighted one. Lucina once requested an LLM to provide illustrations of capital gains tax savings, and the chatbot's calculations were entirely incorrect.

An even bigger concern is that clients might inadvertently leak personal data when using their own accounts. Financial institutions typically pay for enterprise plans with strict data protections. Zeuner noted that WE Family Offices has a deal with Microsoft Copilot ensuring that any data the firm inputs is not utilized to train public AI systems.

What It Means for Your Portfolio

Pathstone's Matthew Fleissig remarked that although chatbots such as Claude and ChatGPT can perform impressive analysis, this does not equate to actionable guidance. He described LLMs as "semi-objective tools" that aren't always equipped to make subjective decisions.

"There is value in human-to-human interaction from a relationship standpoint because there's so much nuance to it," he said.

Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets