AI growth stalls amid rising costs

Financial advice firms are stepping back from the initial rush to adopt artificial intelligence after seeing the true costs and limits of the technology.

Hype gives way to practical concerns

The industry was abuzz with talk of AI transforming financial advice six to nine months ago. That excitement has since cooled.

Rowan Whittington, chief product officer at Dynamic Planner, said firms now realize AI tools are neither as affordable nor as scalable as they first appeared. “People are finding that using AI tooling is costly,” she said. “It’s not as scalable as expected.”

Whittington believes the shift in expectations may help firms focus on technology that suits their needs rather than chasing trends. “Choose what works for you instead of picking something just because others are,” she advised.

Still, she sees long-term potential in AI. A move toward systems that operate with minimal human oversight could change how advisers work.

Agentic AI could free up advisers for higher-value work

Dynamic Planner is speaking with firms that manage 150 to 200 clients. These firms believe AI could enable them to grow their client numbers to between 400 and 600 over the next 12 to 18 months.

“I’m excited to see how AI can free up advisers’ time so they can take on more clients,” Whittington said. The goal is to automate routine tasks like basic calculations or administrative work, allowing advisers to focus on areas requiring human judgment.

“Removing the boring, repetitive parts and letting machines handle them makes sense,” she added. “Two plus two is four—the machine can do that.”

The change isn’t just about efficiency. It could redefine financial advice by letting machines manage the repetitive parts. Yet the shift comes with risks.

Shadow IT and unapproved tools pose risks

Whittington noted that many advisers already use AI tools outside their firms’ approved systems. She described this as “Shadow IT,” where employees rely on personal accounts or unvetted software to process company data.

“Firms must recognize the risks when employees use personal AI accounts or unapproved systems for client information,” she said. The issue isn’t only security but also maintaining control in regulated settings.

The Financial Conduct Authority’s Mills Review has highlighted the need for proper oversight as AI systems grow more autonomous. The challenge lies in adopting new technology without creating new vulnerabilities.

The industry is now moving from early experiments with generative AI to more advanced systems. The real test will be whether firms can balance innovation with practicality—and whether the technology can meet expectations without becoming too expensive.