What Happens When Investors Use AI to Vet Financial Advisors

You are familiar with the old adage: “You can run, but you can’t hide.” In other words, when you market your knowledge, advice, and services on the Internet you may choose to withhold information on your website.  But that does not mean the information is not available on the Internet using AI (Artificial Intelligence) driven searches to find it.

Pro Tip: This makes the withholding of information by financial advisors a dangerous business practice. 

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AI and the Internet are transforming the ways investors find, vet, compare, and contact financial advisors. If they like what they see, they contact financial advisors for introductory meetings. If they don’t like what they see, they have an unlimited number of alternatives with the click of a mouse.

In an age of instant access to information, AI tools promise to streamline the decision-making process, while offering detailed insights into advisors' qualifications, services, and reputations. 

But, how does AI impact the traditional vetting process? Are these tools a reliable substitute for human judgment, or do they create new challenges for financial advisors and investors alike? This article explores what happens when investors use AI to vet financial advisors, examining the opportunities and limitations of this rapidly emerging trend.

How Do Investors Conduct Their Searches?

When investors turn to AI for vetting financial advisors, the process often begins with conversational AI tools like ChatGPT or search engines enhanced by machine learning algorithms. Investors used to input queries such as “best financial advisors near me” or “fee-only financial advisors specializing in retirement planning.” These tools analyze billions of data points to deliver results tailored to the investor’s preferences, geography, and specific needs.

That was the past. Today, using AI, investors may ask, “What can you tell me about ABC Wealth Management?” or “What can you tell me about John Smith at ABC Wealth Management?” or “How does ABC compare to XYZ in the same market?”

AI tools often pull information from various sources, including advisor websites, client reviews, regulatory databases, and social media profiles. Natural language processing (NLP) algorithms enable investors to phrase questions conversationally, such as, “Who are the top fiduciary advisors in New York City?” These tools provide a ranked list of options, complete with summaries and links to additional information.

What Do They See? 

The information investors receive through AI vetting tools can vary widely depending on the algorithms and data sources used. Plus, this puts increasing pressure on financial advisors to practice website transparency.

Typically, AI-generated results include:

• Professional Credentials: Information about an advisor’s certifications, such as CFP, CFA, or CPA designations.
• Specializations: Areas of expertise, such as retirement planning, estate planning, or tax optimization.
• Fee Structures: Details about whether the advisor operates on a fee-only, fee-based, or commission-based model.
• Client Reviews and Testimonials: Aggregated ratings from review sites or social media platforms.
• Online Visibility: Blog posts, articles, videos, and other content created by the advisor to demonstrate thought leadership.
• Regulatory Information: Disclosures from databases like the SEC’s Investment Adviser Public Disclosure (IAPD) or FINRA’s BrokerCheck.
• Geographic Location: Proximity to the investor, often mapped out for convenience.

Pro Tip: AI tools excel at presenting a curated snapshot of an advisor’s online presence and professional background. However, the completeness and accuracy of this information depend on how well the advisor’s digital footprint is managed.

Does It Include Any Compliance Information?

Yes, many AI tools incorporate compliance-related information into their results. For example, they often pull:

• Disciplinary Actions: Data from FINRA’s BrokerCheck or the SEC’s IAPD about past violations or complaints.
• Licensing and Registration: Confirmation of an advisor’s credentials and regulatory status.
• Disclosures: Any Form ADV filings that detail an advisor’s business practices, fees, and potential conflicts of interest.

However, there are limitations. While regulatory databases are reliable, they may not always be fully integrated into every AI tool. Some platforms prioritize easily digestible summaries over comprehensive compliance details, potentially omitting critical information.

Advisors with limited or poorly managed digital presences may find that AI tools fail to highlight their compliance history accurately. This creates an uneven playing field, where advisors who actively optimize their online profiles may appear more credible than those with an equally strong but less visible compliance record.

Will AI Find Lawsuits, Bankruptcies, Foreclosures?

Yes, if investors use AI tools with access to public records, such as court filings, regulatory databases (e.g., FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure database), or credit history reports, AI could report lawsuits, bankruptcies, foreclosures, or settlements involving financial advisors. Here's how AI might handle this:

Public Records Search: AI can analyze publicly available data from legal and financial systems, including:

• Court records for lawsuits and judgments.
• Regulatory filings for disciplinary actions, settlements, or sanctions.
• Public bankruptcy filings or foreclosure notices.

Regulatory Disclosures: Financial advisors are often required to disclose certain legal or financial issues, such as:

• Bankruptcy filings (usually required under Form ADV for RIAs).
• Settlements or arbitration outcomes with clients.
• Regulatory actions or disciplinary records (e.g., FINRA or SEC filings).

AI could compile this information from these regulatory sources and provide summaries for investors.

Data Completeness: While AI can provide comprehensive reports, the accuracy and scope depend on the quality and completeness of the databases AI has access to. For instance:

•  If a court has sealed an issue or resolved privately, AI tools may not report it.
• Some tools may focus on specific data points, like financial performance or credentials, and not include legal or financial problems unless explicitly queried.

Ethical and Legal Considerations: AI tools must comply with privacy laws (e.g., GDPR, CCPA) and ensure that sensitive personal data is used responsibly. There may also be limits on reporting non-public or expunged records.

Potential Investor Benefits: AI providing this information helps investors:

• Assess the financial advisor's character and trustworthiness.
• Identify red flags that may impact the advisor’s ability to act in the investor’s best interest.

Pro Tip: Access to this information makes withholding it a more dangerous business practice. Nothing will erode trust faster than a lack of transparency.

How Important Is A Financial Advisor Website?

A financial advisor’s website is pivotal in the AI vetting process. Since most AI tools scrape data from publicly available sources, a well-optimized website significantly boosts an advisor’s visibility and credibility. Here’s why:

• SEO Optimization: Advisors with websites optimized for search engines are more likely to appear in AI-generated results.
• Transparency: A clear and professional website outlining services, fees, and credentials builds trust with investors and AI algorithms.
• Content Marketing: Blogs, whitepapers, and videos showcase expertise and attract higher rankings in AI-powered searches.
• Contact Information: Easy-to-find phone numbers, email addresses, and appointment scheduling tools improve accessibility.
• Visual Appeal: A modern, user-friendly design creates a positive first impression, increasing investors’ likelihood of engaging further.

Regardless of their qualifications, advisors should not ignore the risk of their websites being overlooked by AI tools. Conversely, a strategically designed website can position an advisor as a top contender in the AI-driven vetting process.

Can Financial Advisors Optimize What Investors See On The Internet?

Yes, financial advisors can take proactive steps to optimize how they appear in AI-generated search results:

• Enhance Online Profiles: Update information on regulatory databases, LinkedIn, and niche platforms that are available online.
• Leverage SEO Strategies: Use relevant keywords on their website and blog to rank higher in AI-powered searches.
• Manage Reviews: Encourage satisfied clients to leave positive reviews on platforms that AI tools access (compliance approval required).
• Disclose Transparent Fees: Clearly outline fee structures and potential conflicts of interest on their website and in Form ADV filings.
• Create High-Quality Content: Publish articles, videos, and podcasts that showcase expertise and align with investor interests.
• Use AI Tools Themselves: Leverage AI for keyword research, content creation, and monitoring online reputation.

By taking these steps, advisors can ensure that the information presented by AI tools accurately reflects their strengths and expertise.

Does The AI Information Include Firms and Professionals?

AI tools typically present information about both individual advisors and their firms. Investors may see:

• Firm-Level Data: Overview of the firm’s history, areas of specialization, and assets under management (AUM).
• Advisor Profiles: Individual credentials, client reviews, and thought leadership content.
• Team Structure: Details about other professionals within the firm, such as tax specialists or estate planners.
• Affiliations: Relationships with custodians, broker-dealers, or third-party services.

For investors, this dual focus provides a more comprehensive view of the firm’s capabilities and the individual advisor’s expertise. However, inconsistencies between firm-level and individual data can create confusion. For example, a firm might excel in retirement planning, but an individual advisor within the firm might specialize in tax optimization. Clearly communicating these distinctions is critical.

Conclusion

The rise of AI in vetting financial advisors represents a paradigm shift for investors and advisors. While AI tools offer unparalleled convenience and access to information, they also introduce data accuracy, transparency, and compliance challenges. 

Financial advisors who invest in their digital presence—through optimized websites, transparent disclosures, and content marketing—can position themselves to thrive in this AI-driven landscape.

For investors, AI is a powerful ally but not a perfect one. Human judgment remains essential, particularly when evaluating subjective factors like trust and compatibility. By combining AI-driven insights with their own due diligence, investors can make more informed decisions and find financial advisors who align with their goals and values.

In this evolving landscape, one thing is clear: the future of vetting financial advisors will be shaped by how effectively both sides adapt to the opportunities and challenges presented by artificial intelligence.