PARTING SHOT

Advisors face the dual challenge of embracing AI ’ s benefits while safeguarding their clients against fraud .

S THE FINANCIAL INDUSTRY HAS INCREASINGLY EMbraced artificial intelligence ( AI ), the technology has ushered in remarkable efficiencies and advancements . But investors are also increasingly concerned , specifically about AI-fueled financial fraud . According to our latest Janus Henderson Investor Survey , 73 % of investors believe AI heightens the risk of financial scams , and more than half of those surveyed ( 56 %) worried that they or their loved ones could become victims .

While these fears are understandable , investors still see value in AI , especially when it comes to streamlining their administrative tasks and delivering educational content . However , it ’ s clear that for investment decisions and personalized communications , clients still strongly prefer the human touch that only a trusted advisor can provide .

For financial advisors , this signals a unique challenge — and opportunity . Here ’ s how advisors can address their clients ’ fears about financial fraud and leverage AI effectively while maintaining personal relationships that build trust .

The Rising Concern Of AI-Driven Financial Exploitation

Financial fraud has long been a concern for investors , but with AI enabling increasingly sophisticated scams , those fears have escalated . In 2023 alone , AIpowered scams led to more than $ 3 billion in losses . Our survey found that younger generations are particularly wary : 66 % of millennials and 63 % of Gen X investors expressed concern about financial fraud ( baby boomers and the silent generation are less worried ). The fear of younger generations may stem

Eighty-three percent of investor survey respondents were comfortable with their advisors using AI to handle administrative tasks , and 85 % were OK with AI-generated educational content .

from their greater familiarity with AI and its potential for misuse . Many millennials and Gen X investors also worry about the vulnerability of older family members , such as parents or grandparents , who may be more susceptible to scams .

Advisors are uniquely positioned to help clients navigate this evolving landscape . While 45 % of advised investor survey respondents have already received resources from their advisor to help them avoid financial exploitation , another 29 % expressed interest in learning more . This presents a clear opportunity for advisors to engage with their clients on a critical issue and , in doing so , strengthen their relationships .

AI In Practice : Balancing Efficiency With Client Trust

Despite their concerns , most investors remain open to using artificial intelligence — within certain boundaries . For instance , 83 % of investor survey respondents were comfortable with their advisors using AI to handle administrative tasks , and 85 % were OK with AI-generated educational content . Those sorts of uses will allow advisors to boost their efficiency and focus more on meaningful client interactions .

However , there is a fine line when it continued on page 58

60 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2024 WWW . FA-MAG . COM