Money hazards: Morgan Stanley exec says AI will allow financial advisors to have 2 to 3 times more clients. Is that a good thing?

Do you only hear from your financial advisor when a bond matures? Or when they want to sell you a complicated investment with no doubt big fees? 

One firm is touting its AI prowess, claiming it will enable financial advisors to double or triple their client base "without adding additional people or support."

If your financial advisor is ghosting you now, just wait — it could get worse. 

Vince Lumia, head of Morgan Stanley wealth management, believes AI is critical to the firm's client expansion. Dan Shaw, a reporter with Financial Planning magazine, provides the backstory. 

"Morgan Stanley was one of the first wealth managers to find uses for artificial intelligence and similar technologies following OpenAI's release of ChatGPT in late 2022. The firm announced the following year it had entered into a partnership with OpenAI and has since been building AI 'agents' on the example of a fictional digital assistant in the Iron Man movies that's capable of undertaking complex tasks with a minimum of human intervention," Shaw wrote in a recent article.

Morgan Stanley's Lumia claims AI would allow its advisors to add "maybe two to three times the amount of clients and assets that they currently serve without adding lots of additional people or support to be able to do that."

Read more: Is your financial advisor using AI for investment recommendations — and hiding it from you?

"I do think with the smaller clients, on the low-value spectrum of financial services, AI will absolutely be a replacement," Lumia added. 

Avoid a money hazard

• If you only need occasional financial guidance, consider hiring an hourly-fee-only Certified Financial Planner.
• If you don't hear from your financial advisor regularly, interview a couple of alternatives and clearly state your service expectations. If you decide to move your assets to a new advisor, be sure to compare fees before signing. 
• Confirm that your new advisor is a fiduciary, dedicated to putting your interests first.
• If you're seeing an increase in communication from your advisor (particularly emails and texts) that provides generic advice, few specific recommendations, cliche phrasing, near-perfect grammar, and odd terminology, you may have already been handed off to AI. It may be time to turn to human advice.