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Artificial Intelligence, which has been advancing for decades, has exploded onto the scene recently, creating exciting and extraordinary use cases in every field from healthcare to manufacturing.

Just look at ChatGPT: The popular chatbot from OpenAI that jumpstarted the current AI conversation is estimated to have had 100 million monthly active users just two months after its launch last November, making it the fastest-growing consumer application in history.

Related: The Rapid Pace Of Communications-Focused Generative AI For Advisors

At the same time, AI has quickly become one of the most innovative technologies of the 21stcentury, with the potential to both enhance and disrupt major industries, including wealth management.And while AI will have many time- and cost-saving uses for the broader financial services sector, what does it mean for the future of financial advisors?

Every five to 10 years, a new technology grabs headlines and stirs up all types of dire predictions about the financial advice business. Most of these prognostications revolved around the imminent disintermediation of financial advisors from their clients.

Related: The Google Glass Flop And Lessons For Fintech Wealth Management Today

They never came to pass.

Many fintech innovations have greatly accelerated the evolution of financial services over the past 20 years, and I fully expected AI to provide even more fuel to increase the speed of our industrys evolutionary process.

However, I believe the need for personal, face-to-face adviceeven if its over Zoomremains as strong today as ever and will continue to be in strong demand going forward.

Technology Doesnt Always Fulfill its Promise

Lets start with the fact there are many examples of innovative technology that were expected to fundamentally transform multiple industry sectors, but never did.

A few years ago, I wrote about howwealthtech entrepreneurs and fintech founders should take some lessons from the failure of Google Glass.Does anybody remember how that specific technology was supposed to revolutionize the way we interact with each other and the world around us?And yet, that never happened.

The basic failure was no one asked for the innovative product.Not only were the glasses aesthetically displeasing, but more to the point, the whole concept of individuals recording everything they see was a bit creepy.

Heres another example:Remember Segways? The high-tech scooter had suchan exciting futuristic promise that none other than Steve Jobs said it was a technology that would do better than the personal computer. But in reality, going at a top speed of 13 mph and having to keep your balance never caught on with the public at large.

Going back to the dot-com era, for every success, its easy to find cautionary tales of start-ups jumping on a transformative new technology, raising huge sums of capital, and never living up to their hype as customers stayed away in droves.

And well have to keep an eye on crypto to see where we go from here. While there definitely seems to be a future for blockchain technology, the proliferation of cryptocurrencies, NFTs and other digital assets have gone too far too fast. Despite their promise, crypto doesnt need to be a significant allocation in every investors portfolio, as the true believers kept exclaiming just a few short years ago. In fact, its safe to say financial advisors will not lose the next generation of clients if they take a slow-walk approach to crypto right now.

The Robo Advisor Revolution That Wasnt

One of the more recent innovations that was going to mark the end of the financial advisor was the robo advisor. It was said these automated platforms would completely supplant human advisors within five yearsback in 2015.

While it has been shown there is a client type for robo advisors, many investors, especially those with higher assets and more complex financial lives, do not want to trust the assets theyve spent a life building to a faceless algorithm.

Its just too far of a leap. Instead, robo advisors have been incorporated within larger wealth management organizations tech stacks to increase scalability, especially with smaller accounts.

Evolution Versus Disruption

All of which brings us to the present-day prophecies about what AI means for wealth management.

In the past few months, weve seen diametrically opposed headlines about the impact of generative learning and AI. On one hand, were told it will permeate every aspect of our lives and make the world a better place. The opposite viewone held by leading researchers in the spacepredicts the proliferation of AI may result in human extinction.

Regardless of your view, it is clear, AI will continue to expand and impact our lives. It seems to me there will be benefits and risks for the wealth management industry.

There has often been a fear-driven response from the broader industry whenever a meaningful new technology emerges. But the reality is that people are not going to be completely replaced by AI due to current cultural expectations of service.

Client-facing advisors and support staff will continue to be important to the investing public. Although some tech-savvy consumers are willing to discuss their financial security with a chatbot, I believe most high-net-worth and ultra-high-net-worth individuals and families will want a person supporting their accounts.

Where AI will potentially have a significant impact is on back and middle office solutions, driven by the need for greater efficiencies in the face of escalating regulatory complexities, rising technology costs and margin compression. In due course, you will see AI as an extension of the broader toolkit advisors have at their disposal to provide an enhanced, yet highly scalable, client experience.

As with past successful technology innovationsincluding the desktop computer, portfolio management and client service software/platforms, the internet and cell phonesAI will ultimately prove to be a substantial benefit to independent advisors by improving the service experience for existing clients, while scaling their practices to support larger client bases.

For wealth management firms, AI-led efficiency and scalability will be of even greater importance as they deal with an ageing advisor population leaving the business just as the generational transfer of wealth creates higher demand for services.

Wealth Management Remains Relationship-Driven

At its core, wealth management remains a relationship-driven business. Clients entrust their assets and financial futures to people after a level of confidence has been built and a sense of reliability established.

Regardless of how much generative learning an AI bot might have, it cannot ask all the right questions, pick up on non-verbal cues or interpret any number of intangible signals. It takes an experienced financial professional with a keen understanding of behavioral finance to be a successful advisor.

Unlike buying the latest gadget that may or may not deliver on its promise, wealth management is much more consequential for individuals and families.

And so long as AI is utilized for evolutionary (versus revolutionary) change, it will be embraced by firms, advisors and clients alike.

Adam Malamed is CEO ofSanctuary Wealth

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Artificial Intelligence Will Drive Evolution, Not Extinction, for ... - Wealth Management