RIAs' adoption of AI isn't slowing their hiring plans, although it may be changing the types of personnel they plan to bring on.
Research released this week by the industry consultant Cerulli Associates in partnership with tech investment firm Vista Equity Partners found that RIAs are much more willing to add roles for senior and junior advisors and associates who work directly with clients rather than administrators, marketers and compliance specialists.
Those results, gleaned from a survey of 68 firms, corroborate many industry experts' predictions for AI: That it will most likely automate back-office functions rather than client-facing work done by advisors and their associates.
Of the RIAs Cerulli surveyed between May and June, 73% said they plan in the next two years to hire junior advisors, 67% client associates and 56% senior advisors. In contrast, just 23% said they plan to hire administrators, 18% marketers and 15% compliance specialists.
"What we've been hearing from the RIA space is that a lot of the administrative back-office roles are kind of on pause right now," said Asher Cheses, senior director of wealth management at Cerulli Associates. "And before firms explicitly hire, they're trying to really figure out where they can utilize AI to automate those functions and those tasks."
Yet the same survey showed that many RIAs have a long way to go in their adoption of AI. Cerulli worked with Vista Equity Partners on an "AI Maturity Score," ranking firms from 0 (least mature) to 100 (most) by their answers to questions related to governance and readiness, operational efficiency, and innovation and revenue.
Half of the respondents were deemed to be in the "exploring stage," meaning they are using AI but not in a managed way. Many lack written policies laying out acceptable uses of the technology, training in AI and data formatted for AI. At this stage, employees tend to experiment with the technology individually rather than adopting it firm-wide.
Meanwhile, 38% of the respondents were deemed to be at the "scaling" stage. This generally means they are using AI for client communications, preparing for meetings and taking notes during client meetings, and they have AI use policies established or underway.
Only 12% were deemed to be "leading," meaning they use AI in varying ways in all their advisory and back-office work. The average firm score on the maturity index was 32.
Cheses said that going into the survey, he and his colleagues hypothesized that larger firms with big technology budgets and staffs would be the most eager adopters.
"What we actually found is that size and scale has little correlation to AI adoption, and the firms that have really been ahead of the curve tend to be smaller and more nimble, but have a very defined governance structure in place, and they have a defined owner [of AI projects]," Cheses said.
He speculated that small RIAs tend to be newcomers with fewer legacy tech systems that have to be modified or rebuilt to comport with AI. Cheses said one reason AI is easy for startups to adopt is that it's usually designed to respond to "natural language" prompts requiring no special technical knowledge or training.
Indeed, many of the AI large language models most often used by advisors are the same systems widely available to the general public, according to Vista Equity Partners. They include Anthropic's Claude, OpenAI's ChatGPT and Google's Gemini, along with notetakers and assistants specifically built for advisors by firms like Zocks and Jump. Cerulli projected the percentage of firms' technology budgets set aside for AI would rise from 8% to 15% by the end of this year.
According to Cerulli's research, some of the most common benefits advisors reap from AI use are a reduction in time spent on administrative and manual tasks (cited by 64% of the respondents), improved client communications (46%) and expedited investment research (33%).
Firms cited various factors contributing to their successes with AI.
When asked, "Which approach has been the most effective at driving internal AI adoption at your firm?" 41% cited the presence of an "AI champion" responsible for finding ways to use the tech. That was followed by "grassroots adoption" (38%) and "training programs" (32%).
One way to reinvest money saved with AI efficiencies is to hire more advisors or train those already on staff.
"Firms getting this right aren't treating AI as a cost-cutting tool," said Dan Parant, the global head of private wealth solutions at Vista Equity Partners. "They're treating it as a growth engine."
Cheses said one of the biggest barriers to AI adoption is simple inertia: Some firms see no reason to change what has worked well for years. Additionally, some firms worry that regulators will scrutinize certain AI uses or that clients' personal information could be exposed through an AI-related data breach.
Even so, Cheses predicted that continued pressure from advisor retirements will drive more firms to adopt AI. Even if the technology isn't slowing hiring plans today, it can lighten workloads for existing advisors, should replacing retirees prove difficult.
"I think it'll likely relieve some of the capacity pressure," Cheses said. "But, you know, I think firms that are bringing in younger advisors can utilize AI to help them service more households, and then over time, maybe take over their retiring advisors' book of business, and maybe they can utilize AI to make it a more seamless transition.
