As more Americans say they plan to rely on artificial intelligence (AI) technology for their daily needs, it’s safe to say this will likely extend to retirement planning.
As a result, retirement plan advisors and partners will need to expand their strategies to make room for the technology, expressed panelists in a session during the first day of the NAPA 401(k) Summit in Nashville, Tennessee.
This is especially true for younger participants, who are more receptive to data sharing and are likelier to trust companies in handling their data properly, said Oliver Hannay, senior retirement product manager at Bank of America. Past research from Cerulli Associates shows that the youngest working generation is keen to providing personal information— 45% of Gen Z respondents in a recent survey said they were “very comfortable” in sharing their spending habits with 401(k) providers.
Since other age cohorts are not as responsive to providing their information, the industry will need to build trust with participants before inquiring on data sharing, Hannay adds. “We need to figure out how to capture data from people, how to disclose it, how to capture it ethically, and what to do with it on an ongoing basis,” he said.
Professionals could also use AI to assist with manual processes or technical tasks that eat up time, like drafting routine communications, follow-up emails, letters to clients, or even filing the Form 5500, panelists added.
Hannay touched on AI’s potential to help clients with smaller assets. As the industry moves away from servicing just the wealthy, financial planners could use the technology to create strategies for small clients, as their finances may not be as complex. AI tools would build a financial plan so advisors could then review before approving or making changes.
It’s this type of partnership between a human advisor and the technology that will shift the industry, notes Brant Wong, managing director and head of Retirement Platforms for J.P. Morgan. He cites a pilot program from Intuit TurboTax that uses AI to match tax filers with a virtual or local tax expert. Filers could upload their tax documents and have AI-powered systems provide recommendations that a tax professional would then review and file.
“It’s going to be a combination of human advisors, plus AI,” Wong said.
Considering this collaborative approach, the question for firms won’t be if they implement the technology, but when and how. For example, will their technologies be outsourced to a third-party, or will the company create its own system? Those are the questions current advisors need to be asking themselves.
“Everyone is going to need to have a plan in place,” Hannay said. “AI has burst into the scene, so not having a plan is not going to work.”
SEE ALSO:
- More Americans Plan to Rely on Artificial Intelligence
- Michael Kitces: Why Chat GPT Complements (Not Replaces) Advisors
- Investors Bullish on AI as a Tool for Advisors
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.